As Planned, Technip Sets out Its Financial Outlook for 2014 and 2015
PARIS -- December 17, 2013
Technip (Paris:TEC) (ISIN:FR0000131708) (ADR:TKPPY) has analyzed the key
elements driving the financial performance of the Group and its Subsea and
Onshore/Offshore segments for 2014 and 2015. As a result, and in line with our
commitment with the third quarter results, we are therefore able to set out
financial objectives covering this period.
The Group starts the period with a strong, profitable and diversified backlog
of projects to execute across its two segments. We continue to see good near-
and medium-term opportunities to win new projects. Focusing on Subsea, we
expect 2014 revenue between €4.35 billion and €4.75 billion and, after a slow
start in the first quarter 2014, a robust margin performance from the second
quarter 2014 onwards. Technip targets, in particular, strong revenue growth on
higher margins in 2015 for Subsea - revenue well above €5 billion and
operating margins* between 15% and 17%.
I. Subsea 2014 and 2015
In 2014, we target revenues between €4.35 billion and €4.75 billion.
Before a substantial improvement from the second quarter onwards, Subsea
operating margins* will be exceptionally low in the first quarter 2014 at
around 5% on similar revenues to the first quarter 2013 reflecting the
*A very high proportion of revenues coming from multi-year projects on
which the Group's policy is not to recognize margin in early phases
*Additional time for our accelerated vessel maintenance and enhancement
*The tail of revenue from the zero-margin Gulf of Mexico projects
*Start-up of the Açu facility during the quarter as planned, with
These elements will be much less important, already in the second quarter. The
last three quarters of the year will all show substantially better margins,
with normal seasonality. This enables us to set as a floor an operating
margin^* of at least 12% for the year as a whole.
The margin performance from the second quarter 2014 onwards will prepare for
strong growth in 2015. At this point, we target 2015 Subsea revenue to be well
above €5 billion and 2015 Subsea operating margins* between 15% and 17%.
II. Onshore/Offshore 2014 and 2015
In 2014, we target revenues of between €5.4 billion and €5.7 billion with
operating margins between 6% and 7% on revenues. This is in line with our
comments at the time of our third quarter 2013 statement and with our
long-term goals. In 2015, we target continued modest growth in our revenues
and stability in our margin levels.
There is a good balance across the Onshore/Offshore segment of early, mid and
late stage projects in 2014 and 2015. We will continue to focus our efforts on
maintaining a diversified project portfolio, based increasingly on value-added
engineering and technology. Our outlook does not take into account any very
major project awards at this time.
Technip will continue to assess its capital expenditure program, and manage
its cost base, in order to ensure we drive appropriate returns on the
investments we have made. As usual, information will be provided with our full
year results on February 20, 2014.
All of the above comments assume, amongst others, that there is no material
change in our underlying markets or macro-economic conditions including
foreign exchange and accounting principles, as well as satisfactory overall
Commenting on the outlook for 2014 and 2015, Thierry Pilenko, Technip’s
Chairman and CEO, said: “the strong investments we have made in people,
technology, assets and national content over the last few years has enabled
Technip to broaden its market footprint, positioning us to provide to our
customers better value-added earlier in their project life cycles. As a
result, our backlog stands at a record level, is diversified and is
profitable. Opportunities for new project awards near- and medium-term
continue, as we see it at Technip, to be widespread. This enables us to set
realistic and achievable objectives for revenue and profit over the coming two
Cautionary note regarding forward-looking statements
This release contains both historical and forward-looking statements. These
forward-looking statements are not based on historical facts, but rather
reflect our current expectations concerning future results and events, and
generally may be identified by the use of forward-looking words such as
“believe”, “aim”, “expect”, “anticipate”, “intend”, “foresee”, “likely”,
“should”, “planned”, “may”, “estimates”, “potential” or other similar words.
Similarly, statements that describe our objectives, plans or goals are or may
be forward-looking statements. These forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause our actual
results, performance or achievements to differ materially from the anticipated
results, performance or achievements expressed or implied by these
forward-looking statements. Risks that could cause actual results to differ
materially from the results anticipated in the forward-looking statements
include, among other things: our ability to successfully continue to originate
and execute large services contracts, and construction and project risks
generally; the level of production-related capital expenditure in the oil and
gas industry as well as other industries; currency fluctuations; interest rate
fluctuations; raw material (especially steel) as well as maritime freight
price fluctuations; the timing of development of energy resources; armed
conflict or political instability in the Arabian-Persian Gulf, Africa or other
regions; the strength of competition; control of costs and expenses; the
reduced availability of government-sponsored export financing; losses in one
or more of our large contracts; U.S. legislation relating to investments in
Iran or elsewhere where we seek to do business; changes in tax legislation,
rules, regulation or enforcement; intensified price pressure by our
competitors; severe weather conditions; our ability to successfully keep pace
with technology changes; our ability to attract and retain qualified
personnel; the evolution, interpretation and uniform application and
enforcement of International Financial Reporting Standards (IFRS), according
to which we prepare our financial statements as of January 1, 2005; political
and social stability in developing countries; competition; supply chain
bottlenecks; the ability of our subcontractors to attract skilled labor; the
fact that our operations may cause the discharge of hazardous substances,
leading to significant environmental remediation costs; our ability to manage
and mitigate logistical challenges due to underdeveloped infrastructure in
some countries where we are performing projects.
Some of these risk factors are set forth and discussed in more detail in our
Annual Report. Should one of these known or unknown risks materialize, or
should our underlying assumptions prove incorrect, our future results could be
adversely affected, causing these results to differ materially from those
expressed in our forward-looking statements. These factors are not necessarily
all of the important factors that could cause our actual results to differ
materially from those expressed in any of our forward-looking statements.
Other unknown or unpredictable factors also could have material adverse
effects on our future results. The forward-looking statements included in this
release are made only as of the date of this release. We cannot assure you
that projected results or events will be achieved. We do not intend, and do
not assume any obligation to update any industry information or
forward-looking information set forth in this release to reflect subsequent
events or circumstances.
Technip is a world leader in project management, engineering and construction
for the energy industry.
From the deepest Subsea oil & gas developments to the largest and most complex
Offshore and Onshore infrastructures, our 38,000 people are constantly
offering the best solutions and most innovative technologies to meet the
world’s energy challenges.
Present in 48 countries, Technip has state-of-the-art industrial assets on all
continents and operates a fleet of specialized vessels for pipeline
installation and subsea construction.
Technip shares are listed on the NYSE Euronext Paris exchange and ADR is
traded in the US on the OTCQX marketplace as an American Depositary Receipt
^*Operating Income From Recurring Activities
Analyst and Investor Relations
Kimberly Stewart, Tel.:+33 (0)1 47 78 66 74
David Tadbir, Tel.:+33 (0)1 40 90 19 04
Christophe Bélorgeot, Tel.: +33 (0)1 47 78 39 92
Technip’s website http://www.technip.com
Technip’s IR website http://investors-en.technip.com
Technip’s IR mobile website http://investors.mobi-en.technip.com
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