Delivering Growth and Profit

Transcription

1 Delivering Growth and rofit Thierry ilenko, CEO Natixis Securities Oil Service Conference September 22, 2008

2 Contents I. II. III. IV. V. Technip at a glance Market osition & Trends Financial erformance Strategy Going Forward Risk Management Annex 2

3 I. Technip at a glance 3

4 Technip Today Worldwide leader in engineering, project management and technologies, serving the oil & gas industry for 50 years 23,000 employees in 46 countries, Industrial assets on 5 continents, a fleet of 16 vessels (19 vessels end 2010) 2007 revenues: 7.9 billion Offshore Onshore Subsea Solutions across the value chain 4

5 Strategic Framework SUBSEA OFFSHORE ONSHORE New organization based on 6 regions with full &L accountability Vertically integrated Subsea business unit More balanced business per segment, region and market Investing in differentiating assets Further expansion in Key Regions and New Frontier roactive commitment to technology & know-how Focus on the needs of Oil & Gas clients 5

6 Two Complementary Business Models SUBSEA OFFSHORE ONSHORE u Capital intensive: fleet and manufacturing units u Negative working capital u Vertical integration from engineering to manufacturing & construction u Negative capital employed: low fixed assets u Negative working capital u High degree of outsourcing & sub-contracting u roject management skills u roprietary technologies & know-how u Solid Balance Sheet u Strong footprint with both IOCs & NOCs 6

7 Subsea Services Architectures roducts Deep Water Installation & Construction Flexible ipes (in house manufacturing) ipelaying Rigid ipelines Inspection, Repair & Maintenance u Vertical integration u In-house technologies u Worldwide leadership u First class assets Umbilicals (in house manufacturing) 7

8 Offshore TG 500 Unideck Semi-submersible Spar ED FSO u Engineering u Innovative concepts u roprietary platform design u roven track record in engineering and construction 8

9 Onshore Refining & Heavy Oil Clean Fuels Grass Roots Heavy Oil upgraders Hydrogen Gas rocessing Gas Treatment GTL LNG etrochemicals Ethylene olyolefins Aromatics Fertilizers u roject management know-how u Strong process engineering capabilities u roprietary technologies (Hydrogen, Ethylene ) u Solid reputation with NOCs & IOCs 9

10 Worldwide resence Orkanger Los Angeles Calgary Houston Stavanger ori Evanton Aberdeen Oslo St. etersburg Newcastle The Hague St. John s London Le Trait Düsseldorf aris Lyon Rome Barcelona Athens Monterrey Abu Dhabi Doha New Delhi Shanghai Mumbai Chennai Bangkok Bogota Caracas Barra do Riacho Lagos Dande Luanda Lobito ort Harcourt Kuala Lumpur Singapore Jakarta Tanjung Langsat (operational in 2010) Balikpapan Vitória Rio de Janeiro erth Regional Headquarters / Operating centers Manufacturing plants (flexible pipelines) Manufacturing plants (umbilicals) Construction yards Spoolbases 10

11 Technip: a Fleet of 19 Vessels by 2010 Current fleet: 16 vessels 3 new vessels Deep Blue Deep ioneer Sunrise 2000 Venturer Skandi Arctic New build Diving Support Vessel Class III Largest & most sophisticated in its category Statoil frame agreement - delivery 1Q 2009 Constructor Seamec rincess Apache Orelia New Brazilian deepwater pipelay vessel Delivery planned for 4Q 2009 Wellservicer Skandi Achiever Normand ioneer Seamec 2 Seamec 3 Geoholm Alliance Seamec 1 New deepwater rigid pipelay vessel High transit speed (20 knots) Worldwide operations Delivery 4Q

12 Multi-local Engineering Capacity 3 million 8.5 million Aberdeen Oslo St. etersburg Calgary Los Angeles Houston St. John s aris Barcelona The Hague Lyon Rome Athens 4.5 million Monterrey Abu Dhabi Doha New Delhi Mumbai Bangkok Shanghai Caracas Lagos Chennai Kuala Lumpur Bogota Luanda Singapore Jakarta Balikpapan Rio de Janeiro 3.5 million 24 million man-hours per year erth 4.5 million 12

13 Attract and Develop Qualified Resources Worldwide Technip headcount by location 23,000 Middle East 18,000 Asia-acific India Russia, Central Asia Africa South America +25% CAGR North America Other Europe Germany 6,000 United Kingdom Italy France

14 II. Market osition & Trends 14

15 Technip s Strong Relationships with both IOCs & NOCs Subsea Offshore facilities Gas processing / LNG Refining, Hydrogen, Heavy oils etrochems Recent projects examples Shah Deniz, Greater lutonio, Secco E Tahiti, Greater Gorgon, Ras Laffan Ethylene North Belut, Q Chem, Qatargas 3 & 4 East Area, Qatargas 2, Rasgas 3 erdido, Na Kika, Qatargas 3 & 4 Akpo, Dalia, Yemen LNG, Gonfreville, Qatargas 2 Das Island Gas, NEB, Takreer refinery Akpo, Agbami, Bonny Island 51, 52 & 56, Roncador Kikeh, Cili adi, etlin & Kertheh LDE Al Shaheen, Qatargas & Rasgas Khursaniyah, Al Jubail Gimboa, Dalia, Kizomba C Source: Technip 15

16 Market evolution: Subsea Key Indicators Market by Region Umbilicals Installed (km) 8,000 6,000 4,000 2,000 0 Subsea Trees (units by onstream year) F 2009F 2010F 2011F F 2009F 2010F Asia acific USA Brazil Africa & Med. Mid. East, India North Sea, Canada Ultra deep water: strong growth driven by the Atlantic triangle Emerging deep water provinces such as India, Indonesia & Malaysia North Sea / Eastern Canada: still a large number of subsea tiebacks Asia acific: sustained activity driven by regional energy demand (gas) Sources: Quest Offshore Resources, Technip 16

17 Market evolution: Onshore Technip Backlog Anticipated Market Growth as of June 30, ,073 million etrochems Ethylene olyolefins TA 36% 14% Refining Grassroots & upgrade Oil sands H 2 Other 4% Gas processing Gas treatment LNG GTL 46% Ethylene capacity addition Crude distillation capacity addition Natural gas liquefaction capacity (mt) (mb/d) (mt) Sources: Cedigaz, UBS, IEA, OEC 17

18 III. Financial erformance 18

19 Financial erformance in millions (audited) Revenue 5,376 6,927 7, EBITDA 1, EBIT and Net Income EBITDA EBIT Net Income (2) Operating income from recurring activities pre depreciation and amortization (not audited) 2 After a 320 million charge on legacy projects 19

20 1H 2008 vs 1H 2007 Financial erformance in millions (not audited) Revenue 3,619 3,641 1H H 2008 EBITDA 1, EBIT and Net Income EBITDA EBIT Net Income H H H H H H Operating income from recurring activities pre depreciation and amortization (not audited) 20

21 Technip s Financial erformance (not audited) Operating Margin per Segment 15.8% 18.8% SUBSEA 8.5% 3.6% 2.1% 7.3% 5.1% 4.1% 10.3% 6.6% 3.5% 3.8% 2.7% 1.6% 9.7% 5.2% 2.2% 4.8% 5.4% 3.2% OFFSHORE ONSHORE H %* * after a 320 million charge on legacy projects 21

22 Balancing backlog mix: segment, region and market Segment Region Market Onshore Offshore Subsea 68% 6% 26% 51% 6% 43% Americas Africa Asia acific 24% 10% 17% Europe / Russia Central Asia 22% 27% Middle East etrochems Refining / Heavy Oil 18% Gas / LNG 23% Other 7% 2% 15% 35% Deepwater Shallow Water June June Backlog as of June 30, ,053 22

23 2008 Full Year Outlook* Revenue Subsea Offshore / Onshore Group 2.7 billion ~ 4.7 billion ~ 7.4 billion Operating Margin Subsea Offshore / Onshore (combined) reaffirmed Group >18.0% 3.8% ~ 8.0% Net Cash Situation billion at year end 2008 * Based upon July 2008 exchange rates 23

24 IV. Strategy Going Forward 24

25 Technip s main Capex projects to fuel Subsea organic growth +20% New DSV New DSV Vessels Capacity Increase ( ) +40% 2010 Capacity ~ 5,800 Vessel-days/year Le Trait Flexible ipes +40% ~ 1,100 km/year* Houston Umbilicals +25% ~ 700 km/year New pipelay vessel new acquired for DSV upgrade New plant (Asiaflex) +50% Lobito upgrade Vitória New pipelay vessel Technip s Capex program: billion Subsea: >85% *standardized 8 inch internal diameter 25

26 Technological Solutions to address new challenges: Deeper Water Spar Arctic Spar 2,000 1,500 Chukchi Sea Houston 1, Barents Sea Orphan Basin meters Nakika (Shell) Reeled ipe-in-pipe Steel Catenary Risers Water depth: 2,000 meters erdido (Shell) Spar operating at the deepest water depths: 2,350 meters Subsea pipelines (depth: 2,950 meters) Technologies for New Frontiers (Shtokman, above N) Winterized topsides Ice resistant hull Double disconnection systems: mooring lines and risers Towards 3,000 meters and beyond Source: Technip 26

27 Technological Solutions to address new challenges: Floating LNG solutions Cryogenic flexible pipe rocessing system FSO Subsea services & product provider LNG carrier FSO LNG (FLNG) Interface of technologies and know-how is key 27

28 Onshore Technologies Development Hydrogen: Enhanced Heat Transfer 25 to 30% increase in hydrogen production Improvement in the overall efficiency CO 2 reduction: ~20,000 tons/y i.e. 6,000 passenger cars LNG: Cryogenic rigid pipe-in-pipe Robust & heavy duty No expansion loops Extremely safe and fire resistant Integrity monitoring system Certified ABS/BV/DNV Long distance Onshore, on trestle or subsea Ethylene: Increased Selectivity Increased efficiency CO 2 reduction Constant capacity furnace size is reduced minimize investment of new furnaces Increased Ethylene roduction by >10% of existing furnaces of the same size H 22 market leadership Integrated qualified innovative solutions roprietary technologies 40% Technip Source: Technip 28

29 V. Risk Management 29

30 Strong demand, yet Volatile raw material prices ersistent cost inflation Construction Wages Capex Workforce shortage Experienced engineers Welders Construction manual labours Oil service market conditions Worsening security conditions in certain areas Higher execution risk Mega and increasingly complex projects Deeper water installation / construction 30

31 Technip s Initiatives Reduce exposure to rocurement and Construction risks romote alternative contractual forms: Engineering and rocurement as Lump Sum + Construction Management Increase reimbursable contracts versus Lump Sum Consortium with construction company (no recourse between partners) Higher selectivity of projects no rocurement & Construction Lump Sum contracts in certain countries: Australia, Russia, North America Strict conditions to ensure success Geographical diversification: reduce Middle East exposure Risk sharing with client: safety, construction, procurement re-bid risk management re-commitment contracts with suppliers before bidding on a we get, you get basis Align construction companies responsibilities Asset scheduling Addressing construction issues at the early stage of projects 31

32 Results thus far Subsea Improved profitability to fund new capex for further development ROCE >15% annualized target obtained Well balanced geographic spread and contract size Dedicated business unit for global asset optimization and coordination between the Regions Onshore/Offshore roportion of EC LS contracts reduced Development of proprietary technologies Spar: vertical integration to diminish tight ship yard availability Toward a better balance of contract sizes: a few large, many medium and multitude of small contracts: No major EC LS contract awards since December 2005, QG III &IV Improved geographic spread: Group Backlog June 30, ,383 Asia Americas acific Europe / Russia 15% 10% 6% Central Asia Africa 15% Americas June 30, ,053 Asia acific Europe / Russia 10% Central Asia 22% 24% 54% Middle East Africa 17% 27% Middle East 32

33 Risk Management Going Forward Subsea Higher subsea content with sustained margins through technological differentiation Considering consolidation process to strengthen our market position Offshore/Onshore Grow activity: Engineering man-hours Focus on profitability rather than on revenue Lower volatility and higher predictability of group earnings Group Capitalize on our key strengths: Technologies, Human Resources and Assets 33

34 Safe Harbor This presentation contains both historical and forward-looking statements. These forward-looking statements are not based on historical facts, but rather reflect our current expectations concerning future results and events and generally may be identified by the use of forward-looking words such as believe, aim, expect, anticipate, intend, foresee, likely, should, planned, may, estimates, potential or other similar words. Similarly, statements that describe our objectives, plans or goals are or may be forwardlooking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied by these forward-looking statements. Risks that could cause actual results to differ materially from the results anticipated in the forward-looking statements include, among other things: our ability to successfully continue to originate and execute large services contracts, and construction and project risks generally; the level of production-related capital expenditure in the oil and gas industry as well as other industries; currency fluctuations; interest rate fluctuations; raw material (especially steel) as well as maritime freight price fluctuations; the timing of development of energy resources; armed conflict or political instability in the Arabian-ersian Gulf, Africa or other regions; the strength of competition; control of costs and expenses; the reduced availability of government-sponsored export financing; losses in one or more of our large contracts; U.S. legislation relating to investments in Iran or elsewhere where we seek to do business; changes in tax legislation, rules, regulation or enforcement; intensified price pressure by our competitors; severe weather conditions; our ability to successfully keep pace with technology changes; our ability to attract and retain qualified personnel; the evolution, interpretation and uniform application and enforcement of International Financial Reporting Standards (IFRS), according to which we prepare our financial statements as of January 1, 2005; political and social stability in developing countries; competition; supply chain bottlenecks; the ability of our subcontractors to attract skilled labor; the fact that our operations may cause the discharge of hazardous substances, leading to significant environmental remediation costs; our ability to manage and mitigate logistical challenges due to underdeveloped infrastructure in some countries where are performing projects. Some of these risk factors are set forth and discussed in more detail in our Annual Report. Should one of these known or unknown risks materialize, or should our underlying assumptions prove incorrect, our future results could be adversely affected, causing these results to differ materially from those expressed in our forward-looking statements. These factors are not necessarily all of the important factors that could cause our actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could have material adverse effects on our future results. The forward-looking statements included in this release are made only as of the date of this release. We cannot assure you that projected results or events will be achieved. We do not intend, and do not assume any obligation to update any industry information or forward looking information set forth in this release to reflect subsequent events or circumstances. **** This presentation does not constitute an offer or invitation to purchase any securities of Technip in the United States or any other jurisdiction. Securities may not be offered or sold in the United States absent registration or an exemption from registration. The information contained in this presentation may not be relied upon in deciding whether or not to acquire Technip securities. This presentation is being furnished to you solely for your information, and it may not be reproduced, redistributed or published, directly or indirectly, in whole or in part, to any other person. Non-compliance with these restrictions may result in the violation of legal restrictions of the United States or of other jurisdictions. 34

35 Technip ISIN: FR Bloomberg: TEC F Reuters: TECF.A SEDOL:

36 Annex 36

37 1H 2008 Financial Highlights 37

38 First Half Income Statement in millions, (not audited) Revenue ES 3, , % +19.2% Operating EBITDA (1) Income (2) % +30.6% Net Income % 1H H 2008 (1) Calculated as Operating Income from recurring activities pre depreciation and amortization (2) From recurring activities 38

39 Subsea in millions, (not audited) Revenue (2.6)% Segment 1,182 1,152 Revenue stable Revenue recognition on Agbami slipped, while MA-D6 provided good input 1H 07 1H 08 EBITDA 1 +26% Segment % % Margin +550bp Strong operating income Good project execution remains key Successful completion of a few projects Operating Income % 1H 07 Segment % 1H % Margin +39bp Backlog increased by 38.7% to 3,499 million versus year ago Market remains dynamic 1H 07 1H 08 1 Calculated as Operating Income from recurring activities pre depreciation and amortization 2 from recurring activities 39

40 Offshore in millions, (not audited) Segment Revenue declined 14.7% year-on-year as expected Revenue (15)% Lower contribution from Akpo FSO in second quarter 2008 and completion of Dalia FSO in June H 07 1H 08 Operating margin increased from 5.1% to 5.4% Segment 21 erdido Spar favorably contributed 19 Operating Income* (10)% 5.1% 1H % 1H 08 Margin 30bp Order Intake declined 32.6% and Backlog slipped 20% year-on-year No new EC facility lump sum contracts were awarded Multitude of engineering contracts * from recurring activities 40

41 in millions, (not audited) Revenue +6% Segment 2,031 1H 07 Segment 66 2,142 1H Onshore Revenue stable compared to last year As major EC lump sum contracts are executed Operating margin continues to improve Our de-risking strategy on new projects has started to produce results Large projects were globally executed according to financial objectives Operating Income* +6% 3.2% 3.2% 1H 07 1H 08 Margin = Order Intake and Backlog declined 25.7% and 37.8%, respectively yoy. Foreign exchange had a negative impact, as most contracts are US$ denominated No major EC lump sum contracts awarded yearto-date Strong workload in engineering centers * from recurring activities 41

42 Subsea Return on Capital Employed in millions Subsea Others** Group H H H 08 Non Current Assets 2,701 2,763 2, ,399 3, Working Capital and Others (601) (1,131) (1,165) (2,134) (1,888) (1,567) (2,735) (3,019) (2,732) Capital Employed* 2,100 1,632 1,675 (1,436) (1,187) (893) Op. Income after tax + income of equity affiliates (97) Net Return on Capital Employed (annual/annualized) 7% 18% 19% * Based on the consolidated balance sheets without restatement of the goodwill already amortized ** Onshore, Offshore and Corporate Segments 42

43 June 30, 2008 Backlog Estimated Scheduling* in millions Subsea Offshore Onshore Group 2H , ,899 3, , ,939 3, ,111 Total 3, ,073 8,053 *Excludes Block 31 contracts awarded in July

44 Backlog by Contract Award Date as of June 30, 2008 Subsea Offshore Onshore 3,499 million 481 million 4,073 million 4% 6% 34% 8% 43% 25% 7% 25% 56% 49% 14% 29% < H

45 First Half Group Income Statement in millions, except ES 1H 07 1H 08 Change ex. FX impact Revenue 3, , % 7.8% EBITDA * % 23.2% Operating Income from Recurring Activities % 28.0% Income from Activity Disposal Operating Income % Operating Margin 6.9% 8.1% 117bp Financial Charges (34.1) (22.3) 34.6% Income of Equity Affiliates nm rofit Before Tax % Income Tax (59.4) (79.0) 33.0% Income tax on Activity Disposal (7.2) - - Minority Interests (3.7) (0.6) nm Net Income % ES ( ) % * Calculated as Operating Income from recurring activities pre depreciation and amortization 45

46 Group Balance Sheet in millions Dec. 31, 2007 June 30, 2008 FIXED ASSETS OTHER ASSETS CASH & CASH EQUIVALENTS TOTAL ASSETS 3, , , , , , , ,927.5 SHAREHOLDERS EQUITY (incl. min. Interests) FINANCIAL DEBT OTHER LIABILITIES TOTAL SHAREHOLDERS EQUITY AND LIABILITIES 2, , , , , ,

47 in millions First Half 2008 Net Cash Flow Statement Net Cash as of December 31, ,704.3 Operating Cash Flow Capex (147.8) Working Capital (172.3) Dividends payment (125.1) Others (62.1) Net Cash as of June 30, ,465.9 roject milestone payments amounted to 1,191 million as of June 30, 2008 versus 1,580 million as of December 31,

48 Market Trends 48

49 Solid fundamentals and outlook for the oil & gas industry Oil supply and E& Capex evolution CAEX in US$ billion mb/d Global Oil roduction Capacity 90 Demand Growth ~35% of current Depletion Effect * 80 production Global Oil roduction CAEX * assuming 3% per year depletion rate Sources: IEA, CERA, IF 49

50 High Capex level required to increase production capacities Canadian Tar Sands roduction mb/d 4 O&G Expenditures (Average per year) LNG Demand bcm % pa % pa. $420 bn % 7% Deep Offshore Capex $bn % pa % $280 bn Other 15% LNG 4% Refining 16% 67% E& 65% Expansion Refining Investments (Average ) $59 bnper year Upgrade 32% 8% 60% Greenfield Sources: IEA, CA, Cedigaz, Douglas-Westwood 50

51 Continuous shift of oil & gas onshore markets towards the East Relative importance of Middle-East and Asia 100% 2,380 Gboe 88 Mt 28 Mt 7.3 Mb/d 24 Mboe/d Africa 80% Europe & Eurasia South America 60% North America 40% 71% 93% 73% Asia-acific 20% Middle East 0% O&G roven Reserves 2006 Gas Liquefaction Ethylene Capacity Addition Refining O&G Demand Growth Sources: B Statistical Review, Cedigaz, UBS, IEA 51

52 Contract Risk rofiles Contractors Roles and Responsibilities 100% Construction/ Installation Contract Value rocurement Engineering/ roject Mgt 0% EC LS ECM LS E& LS ECM Reimb. FEED Reimb./LS Lower risk Source: Technip 52

53 Shareholder structure 53

54 Shareholding structure as of December 31, 2007 Treasury Shares 2.9% Others 2.9% French Institutional Investors 16.3% Individual shareholders 5.6% IF 2.9% Employees 2.4% Other Institutional Investors 67% Listed on Euronext aris 54