KONGSBERG GRUPPEN (KOG) 3RD QUARTER REPORT. 3RD QUARTER 2012

Transcription

1 3RD QUARTER REPORT RD QUARTER 2012 PAGE 1

2 KONGSBERG 2012 KONGSBERG reports a good third quarter, with good margins and a satisfactory influx of new orders. Several important contracts were landed during the quarter, confirming the Group s positions in the maritime market as well as in the defence market. KEY FIGURES Operating revenues: MNOK 3,675 (MNOK 3,460) EBITA: MNOK 570 (MNOK 565) EBITA margin: 15.5 per cent (16.3 per cent) Profit after taxes: MNOK 388 (MNOK 384) New orders: MNOK 3,495 (MNOK 3,117) Earnings per share (EPS): NOK 3.26 (NOK 3.18) * The figures in parentheses refer to the same quarter of the previous year. OPERATING REVENUES Earnings before interest, tax and amortisation (EBITA) RD QUARTER 2012 PAGE 2

3 HIGHLIGHTS KONGSBERG MARITIME (KM) KONGSBERG DEFENCE SYSTEMS (KDS) KONGSBERG PROTECH SYSTEMS (KPS) Higher sales and satisfactory margins Strong influx of new orders, especially for offshore Three new contracts signed for deliveries to floating production vessels (FPSO) Growing order backlog gives larger share of projects in the start-up phase Continued good, but declining new orders in the merchant segment Good level of activity and improved margins Contracts for Penguin anti-ship missiles for the Brazilian Navy Kongsberg Satellite Services (KSAT) has won contracts for ground station services worth a total of about MNOK 332 Successful demo firing of NSMs from vessels Satisfactory progress on the large-scale delivery projects Lower volume but strong margin Won the CROWS III contract with the US Army. Framework agreement with a value of up to MUSD 970, won in open competition Extension of existing CROWS II framework agreement worth MNOK 508 Satisfactory progress for Medium Caliber Remote Weapon Station and several potential projects KEY FIGURES MNOK Op. revenues EBITDA EBITA EBITA margin (%) 15,5 16,3 13,2 14,1 14,1 Earnings before tax Earnings after tax EPS (NOK) 3,26 3,18 8,53 8,94 12 New orders OPERATING REVENUES BY AREA KPS 18% KDS 27% Other 5% KM 50% MNOK Equity ratio (%) 38,4 38,1 35,1 Net interest-bearing debt (567) (491) (2 191) Net interest-bearing debt/ebitda n/a n/a n/a Working capital Order backlog No. of employees KPS 34% EBITA BY AREA KDS 17% Other 7% KM 42% We have had a good quarter, winning several important contracts that further consolidate our market positions Walter Qvam, CEO and President 3RD QUARTER 2012 PAGE 3

4 PERFORMANCE AND THE ORDER SITUATION Revenues in 2012 totalled MNOK 3,675, up 6.2 per cent compared with EBITA was MNOK 570 (MNOK 565), which translates into an EBITA margin of 15.5 per cent (16.3 per cent). Earnings before tax came to MNOK 535 (MNOK 541) in, while earnings after tax were MNOK 388 (MNOK 384). Accumulated YTD operating revenues at end-september 2012 were MNOK 11,443, up 1.8 per cent compared with The YTD EBITA margin in 2012 is 13.2 per cent (14.1 per cent). Based on the current market situation influx of new orders have been good, adding up to MNOK 3,495 (MNOK 3,117) in. Kongsberg Maritime has seen a strong influx of new orders. The two defence segments have won several strategically important contracts. ORDER BACKLOG Breakdown by delivery dates ORDER INCOME % % % NEW ORDERS BY AREA KPS 17% Other 6% KDS 21% KM 56% CASH FLOW KONGSBERG saw a net increase in bank deposits and cash equivalents of MNOK 821 in. The net increase in current assets and other operations-related items was MNOK 421. This is partly due to more capital being tied up in projects, especially at Kongsberg Maritime, due to the higher proportion of projects in the start-up phase. In 2012, KONGSBERG issued two new unhedged bond loans totalling MNOK 750 on the Norwegian bond market. The bond loans have terms of five and seven years, respectively MNOK EBITDA Change in net current assets and other operating related items (421) (139) (2 409) (1 847) (751) Net cash flow from operating activities (677) (75) Net cash flow from investing activities (141) (261) (470) (543) (799) Net cash flow used in financing activities (47) (420) (425) Effect of changes in exchange rates on cash and short-term deposits (8) 12 (9) (11) 4 Net change in cash and short-term deposits (1 203) (1 049) 423 3RD QUARTER 2012 PAGE 4

5 BALANCE SHEET The Group s working capital (current assets less current liabilities) increased from MNOK 2,187 to MNOK 3,549 in. Some of this is ascribable to payments related to the two new bond issues. The increase in gross interest-bearing liabilities is related to the two new bond issues. KONGSBERG has an undrawn credit facility of MNOK 1,000 with maturity in July KONGSBERG s cash flow and working capital can fluctuate significantly from quarter to quarter, owing not least to customers payment dates, payments to suppliers and the amount of capital tied up in ongoing projects MNOK Equity Equity ratio (%) 38,4 38,1 35,1 Total assets Gross bank deposits and cash equivalents Gross interest-bearing liabilities Net interest-bearing liabilities (567) (491) (2 191) Working capital HUMAN RESOURCES KONGSBERG had 7,073 employees at the end of This marked an increase of 153 employees during the quarter. The increase has generally been at Kongsberg Maritime. At end quarter, roughly 34 per cent of the Group s employees worked outside Norway. NUMBER OF EMPLOYEES BY BUSINESS AREA KPS 10% Other 7% KDS 25% KM 58% OTHER ACTIVITIES Other activities mainly consist of Kongsberg Oil & Gas Technologies and external sales related to property operations. Over the past year, Kongsberg Oil & Gas Technologies has been developing a sophisticated system for installing flexible pipelines CRIS (Capstan Reel Installation System). The project has made considerable headway, and the concept is currently being presented to potential customers and partners. The original system development contract has been phased out. 3RD QUARTER 2012 PAGE 5

6 KONGSBERG MARITIME KEY FIGURES MNOK Op. revenues EBITA EBITA margin (%) 13,2 18,7 12,9 16,4 16,1 New orders MNOK Order backlog No. of employees PERFORMANCE The business area has seen strong results in all divisions, especially in the offshore and subsea segments. The margin was lower than in This is partly ascribable to changes in the project and product composition, cost overrun in some projects and generally somewhat higher costs. OPERATING REVENUES EBITA RD QUARTER 2012 PAGE 6

7 OPERATING REVENUES YTD 2012 OPERATING REVENUES YTD 2011 Subsea 25% Subsea 25% Merchant 17% Offshore 58% Merchant 24% Offshore 51% MARKETS AND ORDERS Kongsberg Maritime had a good influx of new orders once again in, with a book/bill of 1.06 (1.35). NEW ORDERS New orders were good for the Subsea and Offshore divisions. The Merchant Marine Division expects a reduction in new orders due to the general slowdown in contracts for new vessels in this segment. The Offshore Division booked important orders for advanced rigs and drilling vessels during the first nine months of the year, strengthening its position with a view to deliveries to advanced offshore vessels (OSV) and standard plattform supply vessels (PSV). In, orders were booked for deliveries to three floating production and storage vessels (FPSO). One important aspect of the strategy for the business area is to extend its scope of supply to more classes of vessels. This has resulted in a favourable development trend in 2012, and in contracts for offshore subsea construction vessels, shuttle tankers and seismic vessels. Kongsberg Seatex s concept for positioning for marine seismic streamer control, ebird, has seen a positive trend in The life-cycle support programme is progressing well. In September, Kongsberg Maritime introduced a 24/7-concept called follow the sun. The concept utilize the business area s global presence, guaranteeing continuity support for business areas customers. The Subsea Division has had a strong influx of new orders in several areas, especially for offshore-related reference systems and AUVs, where the division s market position appears to be stronger, especially in the USA ORDER BACKLOG Breakdown by delivery dates Over the past five to six years, exploration and production activities have migrated towards deeper waters and further offshore. This has boosted demand for advanced offshore vessels. During this period, Kongsberg Maritime has invested a great deal in developing products and technologies aimed at this market segment. Modern equipment and technology enable customers to perform their operations in a safer, and more efficient manner. The business area is well positioned in this market % % % The backlog of orders was valued at MNOK 6,477 at the end of RD QUARTER 2012 PAGE 7

8 KONGSBERG DEFENCE SYSTEMS KEY FIGURES MNOK Op. revenues EBITA EBITA margin (%) 9,6 4,6 7,6 4,9 6,8 New orders MNOK Order backlog No. of employees PERFORMANCE The business area is continuing its good volume trend compared with previous years. Operating revenues climbed by 24.9 per cent in 2012, compared with Kongsberg Defence Systems has also posted a good EBITA margin both in and YTD in OPERATING REVENUES EBITA RD QUARTER 2012 PAGE 8

9 OPERATING REVENUES YTD 2012 OPERATING REVENUES YTD 2011 Integrated Defence Systems 36% Comm. 5% Missile Systems 26% Integrated Defence Systems 30% Comm. 3% Missile Systems 32% Naval Systems 22% Aerostructures 11% Naval Systems 26% Aerostructures 9% MARKETS AND ORDERS Major contracts during the quarter: NEW ORDERS Contract for delivery of Penguin anti-ship missiles and peripheral equipment to the Brazilian Navy s new naval helicopters Value MEUR 33. Contracts delivery of ground station services by Kongsberg Satellite Services (KSAT) Value approximately MNOK The Naval Strike Missile (NSM) is currently in production for the Armed Forces of Norway and the Armed Forces of Poland. The large-scale delivery projects for Poland s coastal artillery, the NSM for Norway and air defence for Finland are all on schedule Many nations are cutting back their defence budgets. KONGSBERG nonetheless considers to be well positioned, due to its portfolio of modern, advanced and cost-efficient niche products. The defence market is characterized by relatively few, but large-scale contracts, meaning that it is normal to see fluctuations in new orders. The backlog of orders at the end of was at a level that gives good predictability for the future level of activity. Successful NSM tests in October In October, the Coast Squadron conducted two demonstration firings of the NSM from the coastal corvette and frigate vessel classes. These were the first firings from an operational weapons control system and they were both successful. The missile followed the planned trajectory, flew more than 100 km, and hit the target ship. The missile demonstrated its highly advanced characteristics on both classes of vessels ORDER BACKLOG Breakdown by delivery dates % % % The backlog of orders was valued at MNOK 7,170 at the end of RD QUARTER 2012 PAGE 9

10 KONGSBERG PROTECH SYSTEMS KEY FIGURES MNOK Op. revenues EBITA EBITA margin (%) 28,3 22,1 23,6 19,6 18,0 New orders MNOK Order backlog No. of employees PERFORMANCE The business area has seen a decline in operating revenues, generally due to changes in delivery schedules, belated new orders and a lower volume of contracts. The good margin is largely a result of a favourable project mix, where the deliveries are related to contracts signed several years ago, when the level of costs per system was higher. OPERATING REVENUES EBITA RD QUARTER 2012 PAGE 10

11 MARKETS AND ORDERS Major contracts during the quarter: NEW ORDERS In August, KONGSBERG won the CROWS III framework contract with the US Army. The agreement covers deliveries, system support and technical support for the M153 CROWS remote weapon control system and has a potential value of MUSD 970 over five years. In July, the CROWS II framework agreement with the US Army was expanded by MNOK 508 for deliveries of spare parts, repairs and maintenance services. In, two orders were booked under this contract, with a collective value of MNOK Kongsberg Protech Systems is currently laying a foundation for the further development of the company s weapon control systems. Marketing activities are flourishing, as are proactive efforts aimed at new markets. Development activities are also flourishing, as existing products are being further developed while new products are being introduced. The Division s most important development programme is the Medium Caliber Remote Weapon Station (MCRWS). The MCRWS is opening up a new market, offering huge potential. The first contract for this system may be signed already in 2012, but the larger volumes will take a little longer ORDER BACKLOG Breakdown by delivery dates CROWS programme In August 2007, KONGSBERG was chosen as a supplier for the US Army s procurement programme for the Common Remotely Operated Weapon Station (CROWS). The contract had a framework of up to NOK 8 billion over five years. In December 2009, the frame was expanded, and since then there have been further expansions that have, collectively, doubled the value of the contract. Thus far, about 10,800 stations have been delivered under the CROWS II contract. In March, KONGSBERG tendered a bid to the US Army for next phase of the CROWS programme, CROWS III. In August, it was announced that KONGSBERG had won the contract. This took place in open, international competition. CROWS III confirms and further consolidates KONGSBERG s position as a world leader in the market for this type of remotely operated weapons control systems % % % The backlog of orders was valued at MNOK 2,997 at the end of RD QUARTER 2012 PAGE 11

12 PROSPECTS FOR THE FUTURE Kongsberg Maritime has built up good market positions, which are expected to be maintained. The business area s markets are strongly impacted by trends in the offshore industry and in world trade in general. Kongsberg Maritime s new orders are largely dependent on the shipyards order books. New orders for offshore vessels continue to be at a good level. Offshore-related orders have accounted for roughly 60 per cent of Kongsberg Maritime s new orders in the past few years. Contracting of new merchant vessels are still relatively slow, which, over time, will have an impact on Kongsberg Maritime s new orders from this segment. The strengthening of the global after-market and customer support are bringing good results and give a sound and stable platform for future earnings. The business area continuously carries out initiatives to adapt its capacity and product portfolio to the needs of the market. In the Board s opinion, the business area s activity level will remain good also in Kongsberg Defence Systems has several major, long-term delivery programmes in the engineering and production phase, laying a good foundation for future earnings. The business area is exploring specific prospects for sales and for the further development of missiles, submarine systems and air defence. The build-up of the production of advanced composite components for the F-35 programme continues, but the programme is moving somewhat slower than previously expected. The development of the Joint Strike Missile programme (JSM) is on schedule, and the US has now officially expressed its support for integration of the F-35. This is a major milestone for KONGSBERG. The Board of Directors expects the business area s activity level to remain good also in Kongsberg Protech Systems has built up a good position on the world market for vehicle-based weapons control systems. This was further confirmed by the allocation of the CROWS III. Active efforts are being made to interface with new and existing customers in many countries that have large vehicles- or have upgrading programmes decided or in the pipeline. These programmes offer significant potential for several of the business area s products. After a period of intense product development, several new products will be launched in the years ahead. Owing to changes in delivery schedules and belated new orders for Kongsberg Protech Systems, the level of activity thus far in 2012 has been lower than in The Board expects the activity level in to be on a par with or somewhat higher than the previous quarters of All in all, KONGSBERG is well positioned in the maritime, offshore and defence markets. The Group has a satisfactory backlog of orders, and the business prospects are good even though there is still uncertainty in the global economy. Kongsberg Maritime and Kongsberg Defence System have strong levels of activity going forward into Kongsberg Protech Systems is in a phase of laying the foundation for future growth. It is approaching 2013 with a level of activity that is lower than what it has been in recent years. Kongsberg, 31 October 2012 The Board of Directors of Kongsberg Gruppen ASA 3RD QUARTER 2012 PAGE 12

13 INCOME STATEMENT MNOK Note Operating revenues Operating expenses (3 025) (2 832) (9 711) (9 473) (12 734) EBITDA Depreciation (80) (63) (227) (184) (262) EBITA Amortisation (30) (22) (86) (67) (97) Impairment - - (10) - - EBIT Net financial items (5) (2) (6) (4) (27) Earnings before tax (EBT) Income tax (147) (157) (385) (440) (578) Earnings after tax Attributable to: Non-controlling interests (2) 3 (3) 4 (1) Equity holders of the parent Earnings per share (EPS), NOK 3,26 3,18 8,53 8,94 11,93 Earnings per share, diluted NOK 3,26 3,18 8,53 8,94 11,93 STATEMENT OF COMPREHENSIVE INCOME MNOK Note Earnings after tax Change, fair value of financial instr. and hedge instr. for cash flow hedges: Change, cash flow hedges and int. rate swap agreements 163 (269) 138 (236) (261) - Change, available-for-sale inv. (1) (8) 13 (22) (12) Actuarial gains/losses pensions (246) Translation differences, foreign currency (40) 42 (36) (16) 14 Tax on items recognised against statement of comprehensive income (46) 75 (39) Comprehensive income RD QUARTER 2012 PAGE 13

14 STATEMENT OF FINANCIAL STATUS MNOK Note Property, plant and equipment Intangible assets Other non-current assets Total non-current assets Inventories Trade receivables Other current assets Cash and short-term deposits Total current assets Total assets Paid-in equity Retained earnings Fair value of financial instruments Non-controlling interests Total equity Long-term interest-bearing debt Other non-current liabilities and provisions Total non-current liabilities and provisions Construction contracts under construction, liabilities Short-term interest bearing debt Other current liabilities and provisions Total current liabilities and provisions Total equity, liabilities and provisions Equity ratio (%) 38,4 38,1 35,1 Net interest-bearing liabilities (567) (491) (2 191) Net interest-bearing debt/ebitda (%) n/a n/a n/a STATEMENT OF CHANGES IN EQUITY MNOK Equity opening balance Comprehensive income Dividends (450) (450) Treasury shares (6) (6) Acquisition/disposals non-controlling interests (4) (5) Dividends non-controlling interests (1) (1) Change in non-controlling interests - (2) Equity, closing balance RD QUARTER 2012 PAGE 14

15 CASH FLOW STATEMENT MNOK Earnings before interest, tax, depreciation and amortisation Change in net current assets and other operating related items (421) (139) (2 409) (1 847) Net cash flow from operating activities (677) (75) Acquisition of property, plant and equipment (124) (117) (358) (336) Acquisition of subsidiaries and non-controlling interests - (116) (13) (136) Net payment of loans and acquisition/sale of shares Other investing activities (17) (28) (99) (71) Net cash flow from investing activities (141) (261) (470) (543) New loans raised and repayment Net interest received (paid) Net payments for the purchase/sale of treasury shares - (2) (19) (14) Transactions with non-controlling interests (5) - (5) 1 Dividends paid to equity holders of the parent - - (450) (450) Net cash flow used in financing activities (47) (420) Effect of changes in exchange rates on cash and shortterm deposits (8) 12 (9) (11) Net change in cash and short-term deposits (1 203) (1 049) Cash and short-term deposits opening balance Cash and short-term deposits, closing balance RD QUARTER 2012 PAGE 15

16 NOTES TO THE QUARTERLY ACCOUNTS NOTE 1 - INFORMATION BY SEGMENT OPERATING REVENUES OP. PROFIT BEFORE AMORTISATION (EBITA) MNOK Kongsberg Maritime Kongsberg Defence Systems Kongsberg Protech Systems Other elimination (7) 36 THE GROUP NOTE 2 - GENERAL INFORMATION AND PRINCIPLES The consolidated (interim) accounts encompass Kongsberg Gruppen ASA, its subsidiaries and the Group s stakes in associates. The interim accounts have been drawn up in accordance with IAS 34 for interim reporting, the Stock Exchange regulations and the supplementary requirements in Norway s Securities Trading Act. The interim accounts do not include all the information required for a full financial statement and should therefore be read in the light of the consolidated accounts for The consolidated accounts for 2011 comply with the rules in the Norwegian Accounting Act and with international financial reporting standards, as laid down by the EU. KONGSBERG has applied the same accounting policies as described in the consolidated accounts for The consolidated accounts for 2011 are available upon request from the Group s headquarters in Kongsberg or at The interim accounts have not been audited. NOTE 3 - ESTIMATES The preparation of the interim accounts entails the use of valuations, estimates and assumptions that affect the application of the accounting policies and the amounts recognised as assets and liabilities, income and expenses. The actual results may deviate from these estimates. The material assessments underlying the application of the Group s accounting policies and the main sources of uncertainty are the same as for the consolidated accounts for NOTE 4 EQUITY-FINANCED DEVELOPMENT In 2012, development costs of MNOK 147 (MNOK 133) were charged against income. In addition, MNOK 20 (MNOK 22) in equityfinanced development was capitalised in. 3RD QUARTER 2012 PAGE 16

17 NOTE 5 FINANCIAL INSTRUMENTS Credit facilities KONGSBERG has undrawn overdraft facilities of MNOK 1,000. Other non-current assets The value on available-for-sale shares has increased by MNOK 13 since year-end Currency futures, options and interest swap agreements The fair value of currency futures, currency options and interest swap agreements, which are classified as prognosis hedges (cash flow hedges), has decreased by MNOK 138 before tax since year-end The change in fair value associated with currency futures and options accounted for an increase of MNOK 99 during the same period. The currency exchange rates on the spot market at end quarter were NOK 5.70/USD 1 and NOK 7.37/EUR 1. Falling due in 2012 Falling due in 2013 or later Total MNOK (before tax) Value based on agreed exchange rates Net excess value at 31 Mar kvartal () Value based on agreed exchange rates Net excess value at 31 Mar kvartal () Value based on agreed exchange rates Change in excess value from 31 Dec Net excess value at 31 Mar kvartal () EUR USD Deferred gain 1) Total ) The gain arises when the prognosis hedges mature and new hedges are secured for the projects. Any gains/losses that arise are deferred and realised proportional to the progress of the project. NOTE 6 CLOSE ASSOCIATES Note 27 in the Annual Report for 2011 lists the details of transactions with close associates. The board is not acquainted with any changes or transactions in in conjunction with close associates that had any material impact on the Group s financial position or on the profit or loss for the period. NOTE 7 KEY RISK AND UNCERTAINTY FACTORS No important new risk and uncertainty factors were discovered during the quarter. For a description of how the Group deals with different risks, please see the Annual Report for RD QUARTER 2012 PAGE 17

18 NOTES 3RD QUARTER 2012 PAGE 18

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20 WORLD CLASS - THROUGH PEOPLE, TECHNOLOGY AND DEDICATION 3RD QUARTER 2012 PAGE 20