Bergen Group Cites Record High Operating Profit

Bergen Group achieved NOK 5.1 billion (US $861,486,486) in operating revenues in 2009 and posted a record high operating profit before depreciation (EBITDA) of NOK 416 million.

"These results strengthen Bergen Group as a leading international maritime group," said CEO Pål Engebretsen. Measures are now being taken to secure the group's further growth strategy.

The operating revenues for the fourth quarter last year amounted to NOK 1,269 million, while the operating profit before depreciation (EBITDA) amounted to NOK 145 million. This corresponds to an EBITDA margin of 11.4 percent in the quarter.

The accumulated operating revenues of NOK 5.1 billion in 2009 represents an increase of 36 percent over 2008. The EBITDA of NOK 416 million is more than doubled since 2008. 

Restructuring to face changed market conditions

"The record profit is a result of a good strategy and improved execution efficiency. Bergen Group has strengthened its position as a leading maritime group with focus on offshore and advanced shipbuilding," Engebretsen said.

Parts of the group are now being restructured to enable further focus on the core strategic areas. Non-core companies within the group will be further developed in a separate profit unit and in the longer term they will be phased out of the group. Furthermore, the Maritime Service division is strengthened through a more centralized management and an expanded activity sphere by way of changes within the group.

The restructuring is expected to yield both operational and financial gains in the current year. In connection with the restructuring, a balance sheet review has resulted in write-downs of excess values of NOK 87 million in total in the fourth quarter 2009. Thus, the group's operating profit before tax (EBIT) amounted to NOK 37 million in the quarter and NOK 239 for the full year 2009.  

Strengthened market position

Bergen Group's order backlog was reduced during the fourth quarter from NOK 5.0 billion to NOK 4.2 billion. The order backlog is still assessed to be sufficient for an activity level in line with 2009 for several of the group's companies. The challenges are primarily related to offshore in the first half of the year and shipbuilding in the second half of the year.

"We register that the activity level within the oil and gas industry remains subdued, and we are prepared for a potentially persisting uncertainty in the first half of the year. However, we have strengthened our position in this segment through investments, new customer relationships and implemented projects. Considering the expected increase in activity in the longer term, the offshore division represents an exciting and important growth area for Bergen Group," said Engebretsen.

The group expects high activity within shipbuilding through 2010. Five new builds are to be delivered in the course of the year. The division has transferred parts of projects and resources between the yards to optimize the capacity utilization over the span of the year.

"There is still uncertainty related to the timing of the shipping company BOA Offshore's completion of financing for four contracted new builds, which are to be built at Bergen Group Fosen. Even though this currently causes uncertainty about the activity level at the Fosen yard in the fourth quarter, there are grounds for optimism with respect to finding solutions that can generate work on these contracts by the end of the year," said Engebretsen. He experiences increasing interest for newbuilds within the core strategic areas of Bergen Group. 

Business Conditions and competition

Engebretsen emphasizes the importance of avoiding that business conditions develop to the Norwegian yard industry's disfavor in 2010. "We have an innovative and competitive business -- as proven by our results in 2009. But it could be difficult to further develop the value creation in Norway if the Norwegian authorities accept that yards in other countries are given more favourable conditions than us. The use of policy instruments in Norway must be aligned with competing countries," he concluded.