Acergy S.A. issues this Pre-Close Trading Update and Outlook ahead of results for the fourth quarter ended November 30, 2007, which are expected to be announced on February 13, 2008.
The group is expected to meet its operational objectives for 2007 delivering approximately $2.7 billion of net operating revenue, a record for the group. Following a disappointing performance on the Mexilhao trunkline project during the fourth quarter, management believes that meeting the group's adjusted EBITDA expectation will be dependent on the positive closure of projects and insurance claims through the reporting period.
Cash balances at year end are expected to be approximately $550 million, after share buybacks of $147 million and capital expenditure of approximately $230 million. Acergy will end the 2007 fiscal year with a strong backlog of approximately $3.1 billion, of which $1.8 billion is for execution in 2008.
Full year net operating revenue for 2008 is expected to reach approximately $3.0 billion. Despite a number of projects in relatively early stages of development, management believes the group will see moderate improvement on the adjusted EBITDA margin achieved in 2006 and targeted for 2007, but with continued quarterly volatility. Ship utilisation rates for 2008 are expected to remain high, despite an extraordinary level of dry docks to be performed in the year, which will return to trend in 2009.
Depreciation and amortisation costs are expected to be approximately $130 million due to the additional assets added to the fleet during the 2007/2008 period. The group is providing guidance on the effective rate of tax at 35% for underlying operations but anticipates quarterly volatility dependent on the timing of resolution of tax audits.
New capital expenditure commitments planned for 2008 are expected to be approximately $145 million. This is made up of approximately $90 million in relation to ongoing maintenance and approximately $55 million for growth. Cash expenditure for 2008 is anticipated to be $250 million including the expected carry forward of payments from the 2007 programme. These estimates exclude any major strategic capital expenditure or any expenditure specifically related to outstanding or future tenders.
For 2008, revenues in Acergy Africa and Mediterranean and Acergy Northern Europe and Canada are expected to be stable compared to the strong growth seen in 2007. Revenues in Acergy South America are expected to be driven higher by significant trunkline work from the Mexilhao project and a growing SURF market. Acergy Asia and Middle East is expected to continue to grow as the deepwater market develops further. Acergy North America and Mexico expects to gain a position in the developing deepwater market in the Gulf of Mexico in 2008, whilst continuing to support cross-regional projects.
"2007 has not been, as initially anticipated, a year of consolidation but one of further growth," said Acergy CEO Tom Ehret. "In 2008, our focus remains on delivery and execution in a market in which the trends remain strong for 2009 and beyond."
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