Acergy S.A. has announced results for the second quarter which ended on May 31, 2009.
Jean Cahuzac, Chief Executive Officer, said, "I am pleased with these results which continue to reflect solid operational performance and our ability to translate project execution into Group margins. We remain on course to deliver results for the year in line with expectations. While our visibility for conventional work in West Africa has recently improved somewhat with the award of the EPC4A contract, the SURF market has become more challenging with sporadic order flow and more aggressive competition. I continue to be cautious for the short-term but, in spite of the uncertainties of the present business environment, I remain confident that Acergy is well positioned to manage through
Acergy Africa and Mediterranean -- Revenue from continuing operations for the second quarter was $207.9 million (Q2 2008: $375.3 million) reflecting fewer major deepwater projects in installation phase compared with the very high level of activity in the comparable quarter in 2008. A number of major projects, including Pazflor, ALNG and EPC4A remain in early stages. Net operating income from continuing operations for the quarter was $41.1 million (Q2 2008: $82.7 million) reflecting lower activity levels and the absence of any major projects completing during the quarter.
Acergy Northern Europe and Canada -- Revenue from continuing operations for the second quarter was $130.6 million (Q2 2008: $210.3 million) reflecting lower activity levels in a challenging market environment. Good operational progress was made on Dong Nini, Tyrihans Subsea Installation and Deep Panuke, which remained in early stages. Net operating loss from continuing operations for the quarter was $4.5 million (Q2 2008: net operating income of $32.4 million), reflecting lower activity levels due to current market conditions and a charge taken on the Marathon Volund Project ahead of completion of commercial settlement.
Acergy North America and Mexico -- Revenue from continuing operations for the second quarter was $29.2 million (Q2 2008: $0.9 million) reflecting the contribution from the offshore installation phase of the Perdido Project. Net operating income from continuing operations for the quarter was $8.1 million (Q2 2008: $5.6 million) primarily due to good progress on the cross-regional Frade Project and contribution from the Perdido Project.
Acergy South America -- Revenue from continuing operations for the second quarter was $100.7 million (Q2 2008: $75.3 million) driven by strong revenue contribution from the Frade Project and the Roncandor Manifolds Project. Net operating income from continuing operations for the quarter was $10.3 million (Q2 2008: $11.2 million) arising from good performance on SURF activities partly offset by the lower utilization on the Acergy Condor, due to thruster problems.
Acergy Asia and Middle East -- Revenue from continuing operations for the second quarter was $53.7 million (Q2 2008: $43.2 million) reflecting good progress on projects, including Van Gogh which completed its offshore phase during the quarter and Pluto, which remains in early stages. Net operating income from continuing operations was $14.9 million (Q2 2008: $8.2 million) reflecting good project performance and a positive contribution from the SapuraAcergy Joint Venture.
The SapuraAcergy Joint Venture successfully completed the Mumbai High South Re-development Phase 2 Project in India during the quarter. The Joint Venture was awarded the $825 million Gumusut-Kakap contract in Malaysia from Shell and the $60 million contract from Nippon Steel Engineering Co. Ltd for the Iwaki Platform Decommissioning Project in Japan.
Net income from discontinued operations for the second quarter was $0.9 million (Q2 2008: net loss of $28.4 million) due to the small positive contribution from the Mexilhao Trunkline Project during a period of relatively low activity.
In line with the Angolan Government’s policy of promoting the development of local private Angolan companies, Acergy and Sonangol have agreed to reduce their shareholdings in Sonamet. Post completion of the sale and transfer of shares, expected later this year, Acergy will remain the largest shareholder with 36% and will continue to manage the Lobito fabrication yard. At that time, the businesses will be deconsolidated from Acergy's financials and its future results reported as share of results of associates and Joint Venture. The Joint Ventures are now classified as assets held for sale on the balance sheet at the quarter end.
Revenue from continuing operations for the second quarter of 2009 was $526 million (Q2 2008: $706 million) primarily reflecting anticipated lower activity levels in West Africa as fewer major deepwater projects were in offshore installation phase and lower activity levels in the North Sea which were partially offset by good activity levels in Brazil and Asia Pacific.
Gross profit was $128 million (Q2 2008: $182 million) reflecting the lower activity levels and portfolio mix as fewer major deepwater project were in installation phase or completed during the quarter, compared to 2008. This was partially offset by good project execution and broadly similar vessel utilisation during the quarter.
Administrative expenses were $55 million (Q2 2008: $62 million) reflecting favourable exchange rate movements and the start of cost reduction initiatives. Acergy’s share of results from associates and joint ventures was $9 million (Q2 2008: $14 million) reflecting a lower contribution from NKT Flexibles and a small loss from Seaway Heavy Lifting, partially offset by a positive contribution from SapuraAcergy.
The Adjusted EBITDA margin from continuing operations for the three months was 21.5% (Q2 2008: 23.1%). The Adjusted EBITDA margin from total operations for the three months was 21.1% (Q2 2008: 18.0%).
Income before taxes from continuing operations for the second quarter was $85 million (Q2 2008: $131 million) reflecting the lower activity levels and the lower contribution from associates and joint ventures. Taxation for the quarter was $9 million (Q2 2008: $41 million) reflecting an effective tax rate for the quarter of 11% (Q2 2008: 31%). The underlying effective tax rate for the Group was 35% in the quarter. During the reporting period resolution of a number of ongoing audits were achieved, including a substantial element of the French tax audit and the UK tonnage tax enquiry. As a consequence certain provisions were released in the quarter.
Net income from continuing operations for the second quarter was $76 million (Q2 2008: $90 million). Net income from total operations for the second quarter was $77 million (Q2 2008: $62 million). The cash and cash equivalents position at the quarter end was $696 million (Q1 2009: $678 million). Deferred revenue, at the quarter end stood at $264 million (Q1 2009: $272 million). Cash and cash equivalents at the end of the first quarter of 2009 included cash balances of $48 million related to Sonamet which, at the end of the second quarter of 2009, were classified as assets held for sale and thus not reflected in the cash and cash equivalents.
At quarter end, Acergy S.A. held directly 11,178,508 treasury shares representing 5.73% of the total number of issued shares, as well as indirectly holding 879,121 treasury shares, representing 0.45% of the total number of issued shares. Total shares in issue were 194,953,972, including these treasury shares.
Backlog for continuing operations as at May 31, 2009 was approximately $2.4 billion, of which $0.9 billion is expected to be executed in the remainder of fiscal year 2009. This backlog figure does not include the backlog relating to associates and joint ventures.
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