Bourbon Annual Results 2010
Despite challenging conditions, the resilience shown by a 2010 EBITDA of 240.9 million euros, validates the pertinence of BOURBON’s strategy Net income, group share of 39.2 million euros “The 2010 results obtained, despite an unusually sluggish market, illustrate the merits of a strategy aimed at meeting client needs in terms of safety, reliability and lower costs through continuous investments in innovative and high-performance vessels” says Jacques de Chateauvieux, Chairman of the BOURBON Board of Directors. “This year BOURBON showed its ability to resist in a market downturn and will deliver its full potential with the implementation of BOURBON 2015 Leadership Strategy plan.”
“The conditions for the success of the plan are now met,” stresses Christian Lefèvre, Chief Executive Officer of BOURBON. “Cash from the 500 million euros disposal plan is already available. The vessels ordered are benefiting from experience acquired in operating the previous series, and the crews can rely on a structure and procedures that meet the needs of clients. The resumption of investments announced by the oil companies and confirmed by the utilization rates of the first two months of the year is creating an environment conducive to a gradual improvement in performance and results.”
Revenues in 2010 came to 849.9 million euros, up 4.6% from the previous year. During the year, both Marine Services and Subsea Services grew, while external charters (now presented under “Other”) practically disappeared.
From one half year to the next in 2010, revenues grew 9.2% thanks to two activities: Marine Services (up 9.5%) and Subsea Services (up 20.4%), while the decline in external charters is responsible for a 28% loss in “other” revenues.
Compared with the second half of 2009, revenues in the second half of 2010 were up 9.6% to 443.6 million euros. This increase in a sluggish market reflects the growth of the fleet and the sharp decrease of charters.
Gross operating income (EBITDA) in 2010 stood at 240.9 million euros, down 19.3% from the previous year, despite an overall increase in revenues driven by Subsea Services, which only partly offsets the effect of market conditions on the performance of Marine Services.
From one half year to the next in 2010, the dip in EBITDA was limited to 2.3%.
In the second half of 2010, owing to a sluggish market, and despite the increase of the number of vessels in the fleet, EBITDA fell by 18.8% from the second half of 2009, to 119.1 million euros.
Operating income fell by 69.7% in 2010 compared with the previous year to 53.5 million euros. Depreciation in 2010 increased by 51 million euros, related mainly to the increase in the number of vessels in the fleet. Provisions increased mainly due to 11 million euros non-recurring provisions in Nigeria and Brazil.
Compared with the second half of 2009, the 78% drop in operating income at 17.6 million euros is also due to depreciation, which increased by 29.2 million in the second half of 2010 and to higher provisions.
The Financial income/loss in 2010 is comparable to the previous year at -32.4 million euros.
It reflects two contrasting changes:
An increase in the cost of financial debt of 21.8 million euros due to the increase in average debt and the reduction of the portion of capitalized interests related to installments paid on vessels under construction;
A favorable change of 18.9 million euros in unrealized earnings from financial instruments.
In the second half of 2010, the financial loss amounted to -38 million euros i.e. an additional loss of 25 million euros compared with the second half of 2009 owing to an increase in the cost of debt and the erosion in unrealized foreign exchange gains.
The activities sold in 2010 yielded a profit of 31.6 million euros.
Net income, group share was positive at 39.2 million euros, down 74.8% from the previous year.
MARINE SERVICES
Revenues in 2010 amounted to 660.3 million euros, up 9.2% from 2009. The impact of the strong growth of the fleet (58 new vessels) was attenuated by the downturn in market conditions. The vessel utilization rate remained high at 79.5% compared with 83% in 2009.
In the second half of 2010, revenues rose by 9.5% compared with the first half of 2010, owing mainly to the growth of the fleet (up 8%).
Compared with the second half of 2009, the average utilization rate in the second half of 2010 remained steady at 81% compared with 89%.
Compared with the previous year, EBITDA in 2010 fell by 24.4% to 182.9 million euros because of market conditions and the increase in costs due mainly to the repositioning of more vessels at the end of their contract.
Compared with the first half of 2010, EBITDA in the second half of 2010 dipped by 9%.
Deepwater offshore vessels
In the year 2010, revenues from Deepwater Offshore vessels came to 308.7 million euros, accounting for 46.7% of the total earned by Marine Services.
In accordance with the strategy which took into account the risks of overcapacity in this segment, only two new vessels were added to the fleet in 2010.
The utilization rate remained high at 90.3% compared with 93.1% in 2009, thanks to the high rate of long-term contracting.
EBITDA excluding capital gains reached 108.6 million euros, or 59.6% of EBITDA excluding capital gains of Marine Services, in line with the high degree of capital intensity of the Deepwater segment.
Shallow water offshore vessels
In the year 2010, revenues from shallow water offshore vessels amounted to 151.7 million euros and accounted for 23% of total Marine Services revenues. During the year, BOURBON vigorously continued its replacement strategy by bringing into the market 26 new Bourbon Liberty vessels, raising to 58 the number of Bourbon Liberty vessels in the fleet at year-end. The time it took to introduce these new vessels and the administrative problems encountered in Brazil (all of which have been solved since then) had a negative effect on the utilization rate, which, however, still reached 73% compared with 84% in 2009.
EBITDA excluding capital gains came to 27.5 million euros, accounting for 15.1% of EBITDA excluding capital gains of Marine Services activity.
Crewboats
In the year 2010, revenues from Crewboats totaled 199.9 million euros, or 30.3% of revenues from Marine Services activity. During the year, 30 new crewboats were commissioned, and 10 old vessels were either sold or destroyed. The utilization rate came to 78.2% compared with 79.1% in 2009.
EBITDA excluding capital gains was 45.9 million euros, or 25.2% of EBITDA excluding capital gains of Marine Services activity.
2010 revenues from Subsea Services amounted to 149.6 million euros, up 17.5% compared with the previous year. This reflects the growth of the fleet (arrival of 3 new IMR vessels and 3 ROV). It also reflects the fact that a high utilization rate was maintained (88.5% compared with 88.1% during the previous year) and that performance was improved through the renewal of contracts with higher rates and expanded services.
Compared with the first half of 2010, the average utilization rate of IMR vessels in the second half of 2010 rose by 5.9 points. During the same period, revenues rose by 20.4% because of the growth of the fleet and the renewal of some contracts under favorable conditions.
Compared with the second half of 2009, the average utilization rate of the IMR vessels rose by 1.6 points in the second half of 2010 to 91.3%.
2010 EBITDA rose 8.3% to 52.8 million euros owing to the growth of the fleet and to improved performance. Compared to the first half of 2010, EBITDA rose 12.5% in the second half of 2010.
OTHER
“Other” mainly includes the activity of the cement carrier Endeavor, offshore vessels chartered externally and items not allocated to the other two activities.
In the year 2010, with the arrival of a number of new vessels in the offshore fleet in a sluggish market, the use of external charters declined considerably. This resulted in a 50.4% decline in “Other” revenues to 40 million euros and in a 33.6% reduction of EBITDA to 5.2 million euros.
OUTLOOK
The market is still expecting oil prices to remain high, creating a favorable environment for investments in the sector. The announcement by the oil companies of an increase in their investments (up 11% in Exploration & Production) has just confirmed this trend in 2011.
For offshore services vessels, BOURBON has seen increasing demand from clients in terms of safety and efficiency of operations, reinforcing their preference for more modern fleets over older vessels, especially in shallow water offshore.
In this context, the demand for vessels is expected to grow, and old vessels will be replaced more rapidly, gradually absorbing the overcapacity.
As a result, the average utilization rate for the BOURBON fleet is expected to continue to improve steadily as already noted in January and February 2011, prior to an increase in dayrates.
DECISIONS BY THE BOARD
As the Board of Directors is confident in the medium and long-term outlook, it will propose to the June 1, 2011 combined Annual and Special Shareholders’ meeting the payment of a dividend of 0.90 euro per share. As in 2009, it will also propose to grant one bonus share for every ten shares held.
