Aker Kvaerner Says 2Q07 Best Quarter Ever
Consolidated operating revenues for the second quarter 2007 amounted to NOK 14,697 million, an increase of 16 percent compared with NOK 12,682 million for the same period last year. This reflects strong markets and high activity in all business areas.
EBITDA for the second quarter of 2007 was NOK 993 million, an increase of 47 percent from NOK 676 million in the second quarter 2006. The EBITDA margin was 6.8 percent compared to 5.3 percent in the second quarter last year. Year to date EBITDA of NOK 1 849 million increased by 40 percent from NOK 1 325 million in the corresponding period last year, which gives a margin increase from 5.7 percent to 6.4 percent.
The second quarter net financial expenses were NOK 26 million, a reduction from NOK 62 million last year. This significant improvement reflects a favorable financial position after the refinancing of the company in December 2006.
Fluctuations in the fair value of hedging transactions which do not qualify for hedge accounting, represented an accounting gain under financial items of NOK 54 million in the second quarter. Reported EBITDA was negatively affected by NOK 24 million in the same period.
The profit after financial items for the second quarter 2007 was NOK 933 million, a significant improvement of 51 percent compared to the second quarter 2006 profit of NOK 616 million. The tax expense for the second quarter was NOK 286 million, which is 31 percent of profit before tax. Net profit for the second quarter was NOK 647 million, giving earnings per share of NOK 2.30. Cash flow from operating activities was negative NOK 492 million in the second quarter of 2007. This reflects a NOK 1,303 million increase in net current operating assets, from NOK 317 million at the end of first quarter to NOK 1,620 million at the end of second quarter.
Cash and bank deposits at the end of the second quarter were reduced to NOK 2.4 billion, a reduction of NOK 1 billion during the quarter. Undrawn committed long-term bank revolving credit facilities amounted to NOK 5 billion, representing a total liquidity buffer of NOK 7.4 billion.
Gross interest bearing debt amounted to NOK 4.1 billion at the end of the second quarter 2007, an increase of NOK 2 billion during the quarter. Net interest bearing items were negative NOK 1.1 billion. Aker Kvaerner's gearing ratio, defined as gross interest bearing debt to EBITDA, is expected to be below two times during a business cycle.
Order intake in the second quarter was NOK 13.3 billion. At the end of June the order backlog was NOK 60.9 billion, an increase of 21 percent from end of second quarter 2006 and a 2 percent increase from end of 2006. The growth represents both new contracts and growth in existing contracts.
The equity ratio at the end of the second quarter was 24.3 percent, an increase from 19.9 percent at the end of first quarter 2007. A dividend of NOK 2 201 million was paid out in April.
In order to strengthen our competitiveness, Aker Kvaerner has initiated multiple improvement programs. The ambition is to improve our cost position with more than NOK 1 billion over the next two to three years.
Strategic ownership of Aker Kvaerner
In June, Aker ASA, Wallenberg-related companies, and the Norwegian Government entered into agreements that provide long-term strategic ownership for Aker Kvaerner. Under the agreements, Aker transfers its 40.1 percent ownership interest in Aker Kvaerner to the newly established company Aker Holding. Aker will hold a controlling 60 percent stake in Aker Holding. The Norwegian Government will own 30 percent of Aker Holding, the Swedish company SAAB and the Swedish investment company Investor will own 7.5 percent and 2.5 percent respectively. The parties have agreed that Aker Kvaerner will continue to be developed as an internationally competitive, major supplier of technology, products, systems, and services, with operations primarily directed at the energy, oil, and gas sectors. Aker Holding's owners will continue the established, close industrial cooperation between Aker Kvaerner and other Aker companies.
Aker Kvaerner acquires drilling technology company
Aker Kvaerner has signed an agreement for acquisition of 50 percent of the shares in the German company Wirth GmbH, with an option to buy the remaining shares over the next few years. Wirth GmbH is a quality supplier of drilling equipment and has been one of Aker Kvaerner's key suppliers for more than twenty years. Wirth's technology complements Aker Kvaerner's technology portfolio and is an excellent fit with Aker Kvaerner's drilling equipment unit, Aker Kvaerner MH. Wirth currently employs 480 people. The company's revenue in 2006 amounted to EUR 140 million and it has a strong order backlog.
The Aker Kvaerner share
During the second quarter Aker Kvaerner announced a buy-back of 1,222,000 own shares, for a consideration of NOK 174 million. Aker Kvaerner currently holds 2,490,830 of the company's 274,000,000 outstanding shares, or 0.906 percent (1,146,170 own shares in the process of being cancelled).
The share price increased from NOK 137 at the end of first quarter to NOK 150 at the end of second quarter. This increase of 9.5 percent represents a value creation of NOK 3.6 billion for the shareholders in Aker Kvaerner.
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