Year End 2001 Results announced by Kvaerner
Kvaerner ASA, the international oil services, engineering and construction, and shipbuilding Group, today announced its results for the year ending December 31, 2001. The pre-tax result after exceptional items was a loss of NOK 5.0 billion. The very weak result is in line with the assumptions made by new Board in connection with the refinancing towards the end of the year. Following the restructuring of debt, the injection of new equity into the Company, and the forthcoming integration of Aker Maritime with Kvaerner Oil & Gas, the Group now has a sound financial basis and a good industrial platform for further development. Helge Lund, President & CEO of Kvaerner, commented on the results saying: ``2001 was a difficult year for Kvaerner. The results are clearly very unsatisfactory, but not highly relevant as the Company now moves forward. The starting balance sheet of Kvaerner with Aker Maritime operations included is as we predicted, and this gives us a good opportunity to create value for the future.''
2001 YEAR-END RESULTS - The operating loss before exceptional items was NOK 755 million. Including sales gains of NOK 285 million and exceptional items of NOK 2,367 million, the operating loss was NOK 2,837 million. The pre-tax result was a loss of NOK 4,961 million. Turnover for the year amounted to NOK 45 billion. The development of the results throughout the year mirrored the emerging problems of the Group. As the problems became more apparent, the results deteriorated significantly throughout the second half of the year. This led to a highly unsatisfactory result for the year as a whole.
Substantial provisions were made in some of the business areas, related to completion problems and disputes on a number of contracts. Furthermore, provisions and write-downs of NOK 4.0 billion were made related to certain exposures, operational assets, and financial investments. The Board will propose to the Annual General Meeting that no dividend should be paid for the year 2001.
FOURTH QUARTER RESULTS 2001 - The fourth quarter operating loss before exceptional items was NOK 573 million compared with a NOK 613 million loss in the previous quarter. The result is mainly due to operating losses in the Engineering & Construction business area of NOK 276 million, the Warnow shipyard of NOK 80 million, and NOK 82 million at the Philadelphia shipyard. Furthermore, the fourth quarter operating loss includes NOK 150 million of costs related to the total refinancing of the Group, and provisions of NOK 87 million related to the move of headquarters from London to Oslo.
In addition to the substantial provisions made in the third quarter, the Board deemed it necessary to take further write-downs and provisions of NOK 0.5 billion -- related mainly to the Greenfield pulp factory in France and the Karbomont factory producing carbon black and hydrogen in Canada.
Sales gains of NOK 285 million were recorded in the fourth quarter for the sales of the Hydrocarbons business (Oil & Gas), Kvaerner Process Technology (Engineering & Construction) and Recycling & Dewatering (Pulp & Paper). During preparation of the Group's accounts for 2001, in January 2002, it was discovered that some historical costs within the Oil & Gas business area had not been recognized in line with the progress of the projects. The project costs in question amounted to NOK 231 million in total, before a reversal of NOK 200 million in unutilized central reserves. The net effect in the Group accounts was NOK 31 million -- and this figure was included in the exceptional provisions and write-downs recorded in the fourth quarter.
The order intake in the fourth quarter amounted to NOK 7.6 billion and the order reserve at the end of the period was NOK 36.6 billion, down from NOK 51.1 billion twelve months earlier. The order intake was significantly higher in 2000, particularly due to contracts within Shipbuilding. Several major orders recently secured by Aker Maritime will be transferred to the Oil & Gas business area as part of the integration of the two businesses.
Business area results - Oil & Gas: In the fourth quarter, operating profit before exceptional items deteriorated to NOK 19 million (3Q: NOK 115 million); revenues for the fourth quarter, however, showed an improvement over the previous quarter of NOK 371 million, to NOK 3,270 million. The business area booked a gain of NOK 125 million on the sale of the onshore engineering activities to Yukos Oil Company of Russia, affecting the profit before tax.
Engineering & Construction: Whilst the operating before exceptional items result improved in the fourth quarter over the previous quarter, the business area still produced a loss of NOK 276 million. The poor result is mainly caused by losses in the Metals business stream, together with the continued under-recovery in the major units, additional project losses within the Process business stream and provisions and contingencies added to projects in both Europe and the U.S. Shipbuilding: The business showed an operating loss before exceptional items of NOK 7.0 million during the fourth quarter, representing a modest improvement over the loss in the third quarter of NOK 24 million. Operating revenues for the fourth quarter were comparable to those in the third quarter -- at NOK 2,772 million. For the year as a whole, the operating profit of the area amounted to NOK 85 million.