Professional Documents
Culture Documents
Rpt. 25621145
12-Mar-2015
2 - 69
Rpt. 25358034
02-Feb-2015
SUBSEA 7 S A
SEB EQUITIES
- FATNES, TERJE, ET AL
70 - 105
www.thomsonreuters.com
EQUITY RESEARCH
Oil services Subsea sector
12 March 2015
SUBSEA SECTOR
Far from a recovery
While we acknowledge that the subsea sector is better
positioned than other sub-sectors due to lower gearing,
we maintain our negative sector view. We do not see a
v-shaped recovery in the offshore investment cycle but
rather a prolonged down-cycle, and expect negative
backlog and earnings momentum to drive share prices
lower. We reiterate our SELL recommendations on Aker
Solutions, Subsea 7, Technip and Saipem.
Cyclical downturn hampering demand. The subsea sector has significant exposure to
the offshore development cycle, particularly the deepwater cycle, whose economics have
been challenged by the ~50% fall in the oil price since July 2014. Leading indicators for
subsea demand (i.e. the sanctioning of new subsea wells and order intake among
offshore drillers) point to a sharp slowdown in demand for subsea services.
120
110
100
90
80
70
60
50
Mar May Jul
Oil Service -
OSEBX
Sep
Nov
Jan
Mar
Jan
Mar
Source: Factset
120
110
100
90
80
70
60
50
40
Mar
May
Jul
Sep
BEUOILS
Nov
OSEBX
Source: Bloomberg
New competition is real, and due to investment decisions made several years ago when
the demand outlook was more promising, new subsea construction vessels are entering
the market in the midst of a demand slowdown. Vessel utilisation is vital for profitability,
and we expect aggressive bidding to drive prices lower.
We see few contract opportunities for 2015. A handful of large development projects
saved industry order intake in 2014, but we expect weak backlog momentum in 2015 as
development projects are delayed and discretionary spending falls as oil companies
adjust to a low oil price environment. Subsea 7 saw 30% backlog erosion in 2014 and its
implied book-to-bill of 0.1x for H2 2014 was a red flag for the industry.
Brazilian problems could have major spill-over effects. Petrobras financial position
has deteriorated recently due to the oil price collapse and corruption allegations. It is one
of the largest consumers globally of subsea services and lower demand (which we find
likely) would hurt the supply/demand balance in the subsea sector in our view.
Consensus is underestimating the depth of the cyclical downturn, and the negative
effect that backlog erosion, high operational gearing and increased competition is set to
have on earnings. Due to subseas late cyclical nature, we do not expect the full effect of
this slowdown to kick-in before 2016+.
We maintain our negative sector view. We expect a prolonged cyclical downturn
extending beyond 2015. At this stage of the cycle we believe earnings momentum and
backlog momentum would be share price drivers for the subsea stocks, both of which we
believe will remain negative for the next 12 months. On average we are 22% below
consensus on 2016e net profit and we forecast continued erosion in 2017e.
Relative sector positioning. On an absolute level we see downside risk to all subsea
companies and maintain our SELL recommendations on all the stocks covered. On a
relative basis, however, we prefer Technip due to its solid backlog coverage and
diversified exposure, while we see most downside risk at Saipem. We are also concerned
about Subsea 7s backlog erosion in 2014 and low contract coverage for 2016e.
Company
Aker Solutions
Saipem
Subsea 7
Technip
Source: DNB Markets
Cur
NOK
EUR
NOK
EUR
Rec
SELL
SELL
SELL
SELL
Target
30.00
7.00
50.00
47.00
Price
39.43
9.56
70.95
58.73
P/E 15e
9.6
20.5
7.7
10.3
P/E 16e
13.8
11.9
15.3
13.6
P/E 17e
15.8
12.3
15.2
17.5
120
110
100
90
80
70
60
Mar
May Jul
OSX
Sep
Nov Jan
S&P500
Mar
Source: Bloomberg
120
110
100
90
80
70
60
50
40
Mar
Source: Bloomberg
ANALYSTS
Eirik Ronold Mathisen
eirik.mathisen@dnb.no
+47 24 16 91 91
Sveinung Alvestad
sveinung.alvestad@dnb.no
+47 24 16 91 92
Please see last pages for important information
Contents
Maintaining our negative sector view
3
6
10
15
17
Relative valuation
Aker Solutions
Saipem
Subsea 7
Technip
20
21
32
43
54
DNB Markets
12 March 2015
70
600
60
500
Rig months
50
400
40
300
30
200
20
100
10
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
5G
6G
PBR awards
Petrobras problems could have severe spill-over effects for the subsea sector
Petrobras is a key consumer of deepwater services (i.e. drilling, subsea trees, flowlines, riser
systems and pipelay support vessels), and it accounts for c10% of global offshore spending.
Its financial position has deteriorated rapidly in recent months due to the oil price collapse and
corruption charges levied against the company due to the corruption allegations it has not
yet reported audited Q3 earnings, all senior management has been replaced and its credit
rating was recently downgraded from investment grade by Moodys (which is no small matter
3
DNB Markets
12 March 2015
when the company has net debt of USD106bn, leverage (net debt to EBITDA) of 4.6x and
high capex commitments).
Figure 3: Petrobras Net debt (USDm) and net debt to
EBITDA
120,000
35,000
4.5x
100,000
4.0x
3.5x
80,000
30,000
25,000
3.0x
60,000
2.5x
2.0x
40,000
20,000
15,000
1.5x
1.0x
20,000
0.5x
Sep.06 Nov.07 Jan.09 Mar.10 May.11 Jul.12 Sep.13
Net debt
10,000
5,000
Source: Petrobras
Source: Petrobras
22 new production systems are expected to commence operations in Brazil between 2016
and 2018, boosting Petrobras production curve by 3 million bpd. Construction contracts for
16 of these systems have already been awarded, 12 of which will be built locally. The eight
replica FPSOs (P66-P73) are already facing construction delays and the hull yard (Ecovix) is
facing financial challenges. Recent reports also suggest that the yard (QGI) responsible for
the integration of two other FPSOs (P-75 and P-77) has pulled out of its contract with
Petrobras. In other words, there is a real risk of delays (and possibly cancellations) on more
than 50% of the pre-salt FPSOs with 20162018 planned start-up.
Figure 5: Petrobras production growth expectations
Source: Petrobras
DNB Markets
12 March 2015
reduced demand from Petrobras would certainly have a negative effect on the global
supply/demand balance for subsea equipment.
Few contract opportunities in 2015e
The subsea industry is not shielded from the cyclical downturn in the offshore oil and gas
industry, and we argue that leading indicators point to a significant slowdown in backlog
momentum in 2015 (although the slowdown started to kick-in in H2 2014). Over recent
months several potential subsea developments have been confirmed as delayed, including
Bonga Southwest, Zinia Phase II, Chissonga, Cameia (until end-2015), Leviathan and Vette.
Several oil companies have highlighted that service costs need to come down before projects
can move forward. We still expect some SURF contracts to move forward in 2015, but do not
see any major awards. In addition, given the limited number of potential contract prospects,
we see a binary outcome for the SURF companies. We expect the following SURF contracts
to be awarded in 2015:
Operator
Country
Expected first
production
Expected SURF
award
USDm *
BP
Cobalt
ENI
Chevron
ENI
Murphy
ONGC
Statoil
Wintershall
Shell
Egypt
Angola
Angola
Nigeria
Ghana
Malaysia
India
Norway
Norway
USA
2017-2018
2018
2017
2016
2017
2018
2016
Late 2019
2018+
2019
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2000
800
500
750
200
750
250
300
250
500
300
4,600
Contractor
Subsea 7
Subsea 7
Subsea 7
Saipem
Saipem
Saipem
Saipem
Technip
Technip
Technip
Technip
Subsea 7
Technip
Subsea 7
Region
West Africa
West Africa
West Africa
West Africa
West Africa
Caspian Sea
West Africa
West Africa
West Africa
Indonesia
West Africa
North Sea
North Sea
US GoM
Awarded
29.07.2010
07.02.2013
15.08.2012
25.06.2013
29.06.2012
19.10.2012
11.03.2013
08.04.2013
31.10.2013
06.03.2014
16.04.2014
21.05.2014
04.07.2014
17.12.2014
Offshore phase
Q2 2012 - Q2 2014
Q1 - Q3 2015
Q3 2014 - Q2 2015
2016 - Q2 2017
Q4/13 - Q2/15
Q2-Q3/14, Q2-Q3/15
Q2 2014 - Q2 2015
2014-2016
mid-2015 - Q2 2016
2016
2016-2017
2015-2016
mid-2016/2017
Q3 2016-Q1 2017
Year 1
Year 2
Year 3
Year 4
Year 5
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
1
1
1
1
1
1
1
1
1
2
2
2
2
= contract award
= offshore phase
Source: Companies, DNB Markets
DNB Markets
12 March 2015
900
18.0 %
800
16.0 %
700
14.0 %
600
12.0 %
500
10.0 %
400
8.0 %
300
6.0 %
200
4.0 %
100
2.0 %
0.0 %
600
500
400
16.0%
900
14.0%
800
12.0%
700
300
10.0%
300
4.0%
200
2.0%
15.0%
400
6.0%
100
20.0%
500
8.0%
200
25.0%
600
10.0%
5.0%
100
2006
2007
2008
2009
2010
2011
2012
2013
2014e
2015e
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015e
1,000
Subsea segment only; note that Technip is building four new PLSVs in a JV with DOF Subsea. The JV (and future capex) is not
consolidated.
2
Offshore Construction segment only
DNB Markets
12 March 2015
We believe the learning curve will be steep (and brutal) for the newcomers, but having made
the decision to build these vessels, the companies have no alternative but to bid for the larger
jobs. Fleet utilisation is vital for profitability, hence it is vital to secure work for the new
enabling assets. Petrofac and McDermott recently announced they have entered a strategic
alliance for the SURF sector. Under the terms of the 5-year alliance the two companies will
pursue opportunities in the deepwater SURF market.
Less demand and increased competition likely to lead to more competitive pricing
We argue that the combination of reduced demand (we expect a book-to-bill below 1x for all
subsea construction companies in 2015) and increased competition to lead to more
aggressive pricing for new contracts. Oil companies are getting the upper hand in contract
negotiations, and have been vocal about the need for lower contract prices. For instance,
Total was very vocal about this during its Q4 conference call when it explained why it had
postponed the FID for the Zinia phase II project in Angola: For Zinia, what I can tell you is
that the result that we got out of the tender, which tells you that there are still people who
havent got who havent understood what the market looks like was 30% above what
were expecting. While Technip can afford to hold back on new awards, Subsea 7 is highly
dependent on building its backlog over the next 12 months, and given the increased
competition for new work, we see a high risk of low margins on the new backlog.
Fleet of subsea construction vessels has grown 27% since 2010
The subsea construction feet consisted of 604 vessels as of end-2014, up 27% from end2010, and by an 8% CAGR since 2004, while the current order book indicates 7% fleet growth
in 2015e and 5% in 2016e. The strongest growth is seen in light construction vessels such as
ROV support, diving support and multipurpose vessels, which are typically owned by the
lower-tier subsea construction companies and offshore supply companies. We believe the
competitive environment will become tougher as offshore activity falls in the coming years,
increasing pressure on dayrates and utilisation.
DNB Markets
12 March 2015
800
700
50
600
40
500
30
400
300
20
200
10
100
<100m
100m-124m
>125m
2017e
2015e
2013
2011
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
1973
1971
Pre-70
90%
85%
90%
80%
75%
80%
70%
70%
65%
60%
60%
55%
50%
50%
45%
40%
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15
Monthly utilization
Average (LTM)
40%
Jan-08
Jan-09
Jan-10
Diving Support
Jan-11
Jan-12
Jan-13
ROV Support
Jan-14
Jan-15
Pipelay
DNB Markets
12 March 2015
by PLSV contracts), and we are starting to believe that its early phase involvement inter alia
through Genesis is an important differentiator.
Figure 15: Book-to-bill (LTM) Subsea 7 vs. Technip (Subsea division only)
2.5x
2.0x
1.5x
1.0x
0.5x
0.0x
Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4
2006
2007
2008
2009
2010
2011
2012
2013
2014
Subsea 7
Other SURF companies have recently increased their exposure to early phase engineering
work. In October 2014 Saipem announced it had created a new subsea engineering firm,
Xodus Subsea (jointly owned by Xodus Group, Saipem and Chiyoda), and in January 2015
McDermott and GE launched a new, independent oil and gas consultancy firm, io oil & gas
consulting.
10
DNB Markets
12 March 2015
2.0x
1.6x
1.4x
1.5x
1.2x
1.0x
1.0x
0.8x
0.6x
0.5x
0.4x
0.2x
0.0x
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3
2007
2008
2009
2010
2011
2012
2013
0.0x
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015e2016e
2014
Saipem
Source: Companies
Technip
Subsea 7
Aggregated order backlog for the tier one SURF companies peaked in Q2 2014, since when it
has fallen for two consecutive quarters. We expect the backlog erosion to continue in 2015
and well into 2016.
Figure 18: Order backlog tier one SURF (USDm)
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2006
2007
2008
2009
Technip
2010
Subsea 7
2011
2012
2013
2014
Saipem
Source: Companies
Backlog coverage varies significantly between the tier one subsea construction companies.
Technip in particular has very good backlog coverage for 2015e and 2016e, versus Subsea 7
which has low coverage for 2016e.
10
11
DNB Markets
12 March 2015
90%
78%
5,000
6,000
90%
80%
5,000
70%
4,000
4,000
60%
61%
3,000
50%
3,000
38%
2,000
40%
2,000
30%
1,000
20%
1,000
10%
-
2015e
2015e
Backlog (L)
2016e
DNBe revenue (L)
Coverage (R)
Source: Subsea 7, DNB Markets
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
-
7,000
80%
72%
6,000
70%
60%
5,000
54%
4,000
40%
3,000
30%
2,000
20%
1,000
10%
2016e
2015e
2016e
Backlog (L)
Backlog (L)
Coverage (R)
Coverage (R)
50%
5,187
14,000
994
12,000
2,708
10,000
8,000
6,000
6,121
330
510
1,613
3,167
5,899
5,037
2009
2010
9,565
4,000
2,000
4,543
6,146
2,794
3,144
9,255
6,713
6,188
5,509
5,509
2013
2014
2015e
2016e
2011
Small- to mid-sized
2012
Larger contracts
PLSV
4
5
11
12
DNB Markets
12 March 2015
10%
-10%
-20%
-30%
2007
2008
2009
Saipem
2010
2011
Technip
2012
2013
Subsea 7
2014e
2015e
2016e
2017e
High operational gearing and weak backlog momentum set to erode earnings
Operational gearing in the subsea construction industry is high due to sizeable fixed costs
associated with the fleet of construction vessels, highlighting the importance of maintaining
high fleet utilisation. In addition to utilisation, profitability in the SURF business depends on: 1)
embedded margin at contract signing; 2) project execution; and 3) optimisation of fleet
utilisation (i.e. demand is strong across regions so companies do not have to steam vessels
from region to region chasing work). In a bad market (as we are now entering), all factors are
turning for the worse: increased (and more desperate) competition lowers embedded
margins, contractors accept more risk in new projects, utilisation falls (inter alia due to less
spot work), and fleet utilisation becomes less optimal as regional demand falls. Hence, we
believe weak backlog momentum and high operational gearing are set to erode earnings over
the next few years.
Tougher competition could increase execution risk in new awards
In a bad market, more intense (and desperate) competition leads to lower embedded margins
in new contract awards. In addition we believe execution risk in new projects increases as
contractors accept more risk and reduce the contingencies they build into the cost base they
bid the projects at. When these projects enter the offshore phase a couple of years out in
time, there is a high risk of project losses if execution has not been flawless. We saw this
effect in 2013 when all tier one SURF companies issued a profit warning due to increased
costs related to projects awarded in a more adverse market (Technip issued a profit warning
in December 2013, but the earnings hit was not taken before Q1 2014).
Figure 24: EBITDA margin tier one SURF companies
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
-5.0%
-10.0%
-15.0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2007
2008
2009
2010
2011
2012
2013
2014
Subsea 7
Source: Companies
12
13
DNB Markets
12 March 2015
2015e earnings are not the problem but 2016e and 2017e earnings are
While we are concerned that backlog erosion will lead to significant earnings erosion, we
highlight that there is a time-lag between prices and margins. Due to this time-lag (which we
estimate is roughly two years), we believe 2015 earnings will be fairly resilient (in addition, even
Subsea 7 has decent backlog coverage for the current year). This effect was particularly clear in
the North Sea in the aftermath of the financial crisis. The graph below shows Subsea 7s
reported EBIT margin for the North Sea and Canada region since 2007 (LTM) versus the bookto-bill ratio in the same region. Even though order intake collapsed in H2 2008 (and resulted in
significant pricing pressure that lasted in 2009 and 2010), margins were resilient well into 2010
(and did not collapse before 2011). We expect to see the same in 2015 (note that Q4 2014
margins were very strong due to the close-out of projects awarded in a better market).
Figure 25: Margin and book-to-bill for Subsea 7's North Sea and Canada region
25.0 %
2.0x
1.8x
20.0 %
1.6x
1.4x
15.0 %
1.2x
1.0x
10.0 %
0.8x
0.6x
5.0 %
0.4x
0.2x
0.0 %
0.0x
2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2008
2009
2010
2011
2012
2013
2014
Source: Subsea 7
13
14
DNB Markets
12 March 2015
6,000
5,000
4,000
3,000
2,000
1,000
People
D&A
Asset imp.
Goodwill
imp.
Other costs
Cost base
14
15
DNB Markets
12 March 2015
50,000
4,000
45,000
3,500
40,000
35,000
3,000
30,000
2,500
25,000
2,000
20,000
1,500
15,000
1,000
10,000
500
5,000
Market cap
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Negative earnings revisions over the past year vary between the different SURF companies.
2015e and 2016e earnings have collapsed for both Subsea 7 and Saipem (the former due to
its inability to build its order backlog, the latter due to execution issues and no margin on
several contracts). While expectations for Technip have moderated, 2015e and 2016e
consensus is only down 12% and 27% YOY, respectively.
Figure 28: Changes to earnings
forecasts Subsea 7
2015e
2016e
-10%
-5%
-20%
2016e
-10%
-3%
-10%
-15%
-40%
-20%
-12%
-30%
-14%
-35%
-20%
-34%
-40%
-39%
-46%
-25%
-60%
-70%
2015e
2016e
-22%
-30%
-50%
-50%
-50%
-62%
-30%
-27%
-60%
-57%
Despite the significant earnings revisions over the past year, we do not believe the negative
earnings cycle has troughed, and we still see significant downside risk to 2016 estimates in
particular. We forecast a prolonged cyclical downturn in the subsea sector, which is likely to
depress order intake over the next few years. Consensus for 2017 is not yet available, but we
expect earnings erosion to extend into 2017. The notable exception is Saipem, as earnings
are currently depressed by zero-margin work due to be completed by 2017. Where we believe
consensus is wrong is the duration of the current downturn and the effect backlog erosion,
high operational leverage and increased competition will have on earnings over the next few
15
16
DNB Markets
12 March 2015
years. In addition, due to its late cyclical nature, we do not believe the full effect of the
slowdown will kick-in before 20162017.
Figure 31: DNB revenue forecasts versus consensus for
20152016e
2%
1%
1%
1%
-5%
-1%
-10%
-2%
-15%
-5%
-6%
-6%
-10%
-3%
-20%
-3%
-4%
-20%
-4%
-5%
-6%
-30%
-7%
-6%
-7%
-35%
-8%
-9%
2015e
-21%
-22%
-25%
-5%
-8%
2016e
Subsea 7
-37%
-40%
2015e
2016e
2015e
Technip
2016e
2015e
Saipem
2016e
2015e
2016e
2015e
Subsea 7
Aker Solutions
2016e
2015e
Technip
2016e
Saipem
2015e
2016e
Aker Solutions
Net profit
Revenue
Source: DNB Markets, Bloomberg consensus
While we are some way below consensus on 2016e net profit for Subsea 7, consensus does
imply a sharp fall in earnings in 2015 and 2016. The situation is different for Technip where
consensus assumes peak earnings extend into 2016. Saipem is in a different situation, as
earnings over the past two years have been hampered by one-off losses and zero margins on
several E&C contracts awarded in the market trough of 2009 and 2010.
Figure 33: Net profit Subsea 7 (USDm)
900
800
1,000
800
700
800
700
600
600
600
500
400
500
400
400
200
300
300
200
200
100
100
-200
-400
DNB
Cons.
DNB
Cons.
DNB
Cons.
16
17
DNB Markets
12 March 2015
14.0x
12.0x
10.0x
8.0x
6.0x
4.0x
2.0x
Jan.06
Jan.08
Jan.10
Jan.12
Jan.14
Subsea 7 (6.4x)
Technip (6.6x)
Saipem (11.1x)
We see the same trend for 2-year forward P/Es. On consensus estimates the sector is trading
at a slight discount to historical multiples, versus a small premium on our forecasts.
Figure 38: 2-year forward P/E SURF companies
25.0x
25.0x
20.0x
20.0x
15.0x
15.0x
10.0x
10.0x
5.0x
5.0x
-
Jan.06
Jan.08
Jan.10
Jan.12
Jan.14
Subsea 7 (10.5x)
Saipem (10.2x)
Technip DNBe (14.6x)
Technip (12.4x)
Subsea 7 DNBe (15.8x)
Saipem DNBe (12.1x)
17
18
DNB Markets
12 March 2015
9.0x
4.5x
8.0x
4.0x
7.0x
3.5x
6.0x
5.0x
3.0x
4.0x
2.5x
3.0x
2.0x
2.0x
1.5x
1.0x
1.0x
0.5x
Aug.06
Subsea 7 (0.5x)
Technip (1.6x)
Saipem (1.0x)
Aug.08
Aug.10
Subsea 7 (0.7x)
Aug.12
Technip (1.6x)
Aug.14
Saipem (1.0x)
In our view low P/Bs reflect significant deterioration in the return profile for several of the subsea
construction companies. As can be seen below, ROEs for both Subsea 7 and Saipem have
collapsed since the 20072008 peak, and we expect them to remain subdued over the next few
years. We forecast a ROE of c5% for Subsea 7 in 20152016 (broadly in line with the return
profile over the past few years), with a COE above 10%, and believe the stock should be trading
at a P/B significantly below 1x. Technip has been able to maintain its ROE at around 14% over
the past five years, but as the cyclical downturn extends, we see its ROE trending towards 10%
(2014 ROE was depressed by low profitability in Q1 2014 in the US GoM).
Figure 42: ROE Subsea 7
40.0%
16.0 %
35.0%
14.0 %
30.0%
12.0 %
25.0%
30.0%
20.0%
10.0 %
15.0%
8.0 %
20.0%
10.0%
6.0 %
10.0%
4.0 %
Return on equity
Source: Subsea 7, DNB Markets
2016e
2014
2015e
2013
2012
2011
2010
2009
Return on equity
Return on equity
Source: Technip, DNB Markets
2008
2006
2016e
2014
2015e
2013
2012
2011
2010
2009
2008
-10.0%
2006
2016e
2014
2015e
2013
2012
2011
2010
2009
0.0 %
2008
-10%
2007
2.0 %
2006
-5%
2007
2007
5.0%
18
19
DNB Markets
12 March 2015
25%
120
20%
20%
110
16%
15%
100
10%
90
10%
5%
80
1%
70
-5%
SUBC (-2%)
TEC (3%)
AKSO (-9%)
Brent (-35%)
Feb-15
Feb-15
Feb-15
Jan-15
Feb-15
Jan-15
Jan-15
Jan-15
Jan-15
Dec-14
Dec-14
Dec-14
Dec-14
Nov-14
Nov-14
-15%
Nov-14
-11%
Nov-14
50
Oct-14
-10%
60
-4%
-5%
-7%
SPM (-23%)
30.0x
700
25.0x
600
20.0x
500
400
15.0x
300
10.0x
200
5.0x
100
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
1Y forward PE (R)
19
20
DNB Markets
12 March 2015
Relative valuation
Figure 48: Valuation versus other oil service peers
CAGR 14-16e
Company
Sales EBITDA
EBIT
EV/Sales
EPS
EV/EBITDA
EV/EBIT
P/E
P/B
(14e)
(15e)
(16e)
(14e)
(15e)
(16e)
(14e)
(15e)
(16e)
(14e)
(15e)
(16e)
(cur.)
P/E
Aker Solutions
-7%
-8%
-11%
-14%
0.4x
0.4x
0.5x
4.4x
5.1x
6.3x
5.7x
6.9x
9.2x
8.0x
9.6x
13.8x
1.9x
-63%
-19%
-35%
-29%
FMC
-4%
-5%
-4%
-5%
1.2x
1.2x
1.2x
7.1x
7.3x
7.1x
8.8x
8.6x
8.7x
13.1x
14.0x
14.3x
3.5x
2%
15%
-19%
3%
Cameron
-11%
-12%
-13%
-20%
1.1x
1.2x
1.2x
7.0x
7.8x
8.1x
8.9x
10.6x
10.7x
11.2x
14.3x
15.7x
1.9x
3%
23%
-1%
5%
NOV
-16%
-20%
-20%
-24%
0.9x
1.0x
1.1x
4.3x
5.6x
5.9x
5.2x
6.9x
7.1x
8.3x
12.9x
14.9x
1.0x
-11%
-12%
-35%
-5%
Subsea 7
-17%
-22%
-33%
-38%
0.5x
0.6x
0.7x
2.3x
3.4x
4.3x
neg.
6.1x
11.3x
4.0x
7.7x
15.3x
0.5x
-46%
-47%
-43%
-44%
Technip
-2%
3%
3%
3%
0.4x
0.5x
0.5x
3.8x
4.1x
4.7x
5.1x
5.4x
6.6x
11.3x
10.3x
13.6x
1.6x
-57%
-35%
-49%
-24%
Saipem
-8%
4%
11%
16%
0.6x
0.7x
0.7x
6.7x
6.5x
5.3x
neg.
16.9x
11.2x
neg
20.5x
11.9x
1.0x
-35%
2%
58%
51%
Schlumberger
-7%
-9%
-12%
-13%
2.3x
2.6x
2.6x
8.2x
10.3x
9.7x
11.5x
15.6x
14.5x
14.7x
22.1x
19.9x
2.7x
128%
62%
46%
63%
Baker Hughes
-8%
-11%
-16%
-19%
1.2x
1.3x
1.3x
6.4x
7.9x
7.2x
10.5x
17.3x
13.6x
15.6x
high
23.5x
1.4x
14%
24%
62%
Halliburton
-4%
-8%
-11%
-19%
1.2x
1.4x
1.3x
5.7x
7.9x
6.3x
8.0x
11.7x
9.6x
10.5x
23.6x
18.1x
2.2x
22%
24%
9%
-11%
-14%
-27%
-35%
1.1x
1.4x
1.3x
5.7x
8.1x
7.0x
10.5x
high
18.1x
12.4x
high
high
1.4x
18%
28%
n.a.
Amec
22%
21%
20%
15%
1.0x
0.6x
0.6x
10.9x
7.2x
7.0x
13.4x
9.3x
8.8x
10.8x
10.2x
9.7x
2.6x
-44%
13%
-13%
-25%
Wood Group
-4%
-5%
-4%
-7%
0.5x
0.5x
0.5x
6.5x
6.8x
6.7x
8.9x
9.1x
9.0x
9.6x
10.5x
10.6x
1.4x
-54%
7%
-15%
-23%
Petrofac
11%
9%
7%
1%
0.8x
0.8x
0.7x
5.9x
6.0x
5.1x
8.2x
8.7x
7.3x
7.8x
9.4x
7.8x
2.4x
-35%
-5%
-18%
-31%
McDermott
13%
#N/A
n.m.
n.m.
0.5x
0.4x
0.4x
high
7.6x
5.1x
neg.
21.4x
11.7x
n.a.
n.a.
high
0.5x
-68%
20%
100%
Weatherford
Oceaneering
-4%
-5%
-11%
-12%
1.4x
1.6x
1.5x
6.2x
7.1x
6.9x
8.4x
11.1x
10.7x
13.0x
16.0x
15.5x
3.1x
36%
11%
4%
CGG Veritas
-32%
-10%
8%
n.m.
1.2x
1.4x
1.3x
4.0x
4.4x
4.1x
neg.
high
15.7x
n.a.
n.a.
high
0.4x
20%
-31%
n.a.
73%
18%
PGS
-3%
-6%
-19%
-24%
1.5x
2.2x
2.1x
3.0x
4.8x
4.5x
10.7x
high
21.8x
11.4x
high
18.3x
0.6x
87%
-25%
n.a.
TGS
-10%
-10%
-14%
-16%
2.3x
2.9x
2.9x
2.8x
3.5x
3.5x
5.9x
8.6x
8.1x
9.1x
13.2x
12.3x
1.7x
148%
-45%
-19%
-3%
WorleyParsons
-16%
-14%
-15%
-17%
0.3x
0.4x
0.5x
4.8x
5.8x
6.0x
5.9x
7.4x
7.6x
8.9x
9.8x
10.8x
1.1x
-62%
-8%
-31%
-28%
Average
1.0x
1.2x
1.1x
5.6x
6.4x
6.0x
8.5x
10.7x
11.1x
10.6x
13.6x
14.5x
1.6x
Median
1.0x
1.1x
1.1x
5.7x
6.7x
6.1x
8.6x
9.1x
10.1x
10.8x
12.9x
14.3x
1.5x
Max
2.3x
2.9x
2.9x
10.9x
10.3x
9.7x
13.4x
21.4x
21.8x
15.6x
23.6x
23.5x
3.5x
Min
0.3x
0.4x
0.4x
2.3x
3.4x
3.5x
5.1x
5.4x
6.6x
4.0x
7.7x
7.8x
0.4x
0.9x
1.0x
1.0x
5.0x
5.3x
5.2x
8.0x
8.7x
10.6x
9.0x
11.2x
12.4x
1.4x
US oil service
1.2x
1.3x
1.3x
6.3x
7.7x
7.0x
9.0x
12.9x
11.6x
12.4x
17.1x
17.4x
2.0x
SURF companies
0.5x
0.6x
0.7x
4.3x
4.7x
4.8x
5.1x
9.5x
9.7x
7.7x
12.8x
13.6x
1.0x
20
21
DNB Markets
12 March 2015
SELL
AKER SOLUTIONS
Still no light in the tunnel
TP: NOK30.0
2011
22,081
1,607
1,306
743
1.68
3.21
0.00
nm
nm
nm
nm
7.3
nm
nm
nm
nm
2012
28,345
2,220
1,863
1,724
4.54
4.47
0.00
28.4
38.1
39.0
17.3
7.8
22.6
24.0
nm
nm
2013
29,058
2,079
1,580
1,577
4.31
4.31
0.00
2.5
-6.4
-3.5
-2.8
7.2
21.2
17.6
nm
nm
2014
32,971
2,675
2,080
1,817
4.71
5.19
1.45
13.5
28.7
20.4
-12.9
8.1
0.36
4.4
5.7
8.0
1.99
20.7
21.5
3.5
13.6
2015e
30,640
2,514
1,874
1,691
4.11
4.11
1.23
-7.1
-6.0
-20.9
-21.7
8.2
0.42
5.2
6.9
9.7
1.68
17.8
19.7
3.1
-10.4
2016e
27,190
1,982
1,347
1,179
2.85
2.85
0.86
-11.3
-21.2
-30.6
nm
7.3
0.46
6.3
9.3
13.9
1.58
11.3
13.9
2.2
5.1
2017e
25,390
1,766
1,160
1,032
2.49
2.49
0.75
-6.6
-10.9
-12.5
nm
7.0
0.48
6.9
10.6
15.9
1.48
9.3
11.5
1.9
3.1
70
65
60
55
50
45
40
35
30
Sep Oct
Nov Dec
Jan Feb
Aker Solutions
OSEBX (Rebased)
Source: Factset
SUMMARY
Recommendation (prev.)
SELL (SELL)
Share price (NOK)
39.7
Target price (previous) (NOK)
30.0 (32.0)
Upside/downside potential (%)
-24
Tickers
AKSO NO, AKSO.OL
CAPITAL STRUCTURE
No. of shares (m)
272.0
No. of shares fully dil. (m)
272.0
Market cap. (NOKm)
10,795
NIBD adj end-2015e (NOKm)
2,183
Enterprise value adj (NOKm)
12,978
Net debt/EBITDA adj (x)
0.94
NAV per share (NOK)
36.4
SHARE PRICE PERFORMANCE
Abs. 1/3/12m (%)
6/10/-39
Rel. 1/3/12m (%)
6/-2/-50
High/Low 12m (NOK)
65/32
Free float (%)
53
Source: Company, DNB Markets
UPCOMING EVENTS
Q1 2015
07/05/2015
2016e
3.06
2.85
-6.7
3.64
2017e
2.69
2.49
-7.3
Sales (old)
Sales (new)
Change (%)
Consensus
27,640
27,190
-1.6
28,910
26,140
25,390
-2.9
30,640
30,640
0.0
29,035
ANALYSTS
Eirik Ronold Mathisen
eirik.mathisen@dnb.no
+47 24 16 91 91
Sveinung Alvestad
sveinung.alvestad@dnb.no
+47 24 16 91 92
Please see last pages for important information
21
22
DNB Markets
12 March 2015
68
58
NOK49 (23%)
48
NOK40
38
NOK30 (-24%)
28
NOK22 (-45%)
18
Sep 2014
Jan 2015
May 2015
Sep 2015
Jan 2016
Current Share Price
-189
28
2,480
-283
2,280
-249
2,080
1,880
1,680
1,480
2,675
2,514
1,982
2016e
Other
Margin expansion
Volume growth
2015e
Other
Margin expansion
Volume growth
2014e
1,280
22
23
DNB Markets
12 March 2015
New
2016e
27,190
2017e
25,390
2015e
30,640
Old
2016e
27,640
2017e
26,140
2015e
0
Change
2016e
-450
2017e
-750
-28,126
2,514
2,514
8.2
-25,208
1,982
1,982
7.3
-23,624
1,766
1,766
7.0
-28,135
2,505
2,505
8.2
-25,583
2,058
2,058
7.4
-24,278
1,863
1,863
7.1
9
9
9
0.0
375
-75
-75
-0.2
654
-96
-96
-0.2
Depreciation
Impairment of PPE
EBITA
-592
0
1,922
-584
0
1,398
-553
0
1,214
-587
0
1,918
-574
0
1,483
-566
0
1,296
-5
0
4
-9
0
-85
14
0
-82
Amortisation
EBIT
EBIT adj
-48
1,874
1,874
-51
1,347
1,347
-54
1,160
1,160
-48
1,870
1,870
-51
1,433
1,433
-53
1,243
1,243
0
4
4
-1
-85
-85
-1
-83
-83
Net interest
FX gains
Net financial items
Non-recurring items
PBT
-183
0
-183
0
1,691
-168
0
-168
0
1,179
-128
0
-128
0
1,032
-183
0
-183
0
1,687
-168
0
-168
0
1,264
-130
0
-130
0
1,114
0
0
0
0
4
1
0
1
0
-85
2
0
2
0
-81
Taxes
Minorities
Discontinued operations
Net profit
Adjustments to net profit
Net profit adj
-558
-19
0
1,114
0
1,114
-389
-16
0
774
0
774
-341
-15
0
677
0
677
-557
-20
0
1,111
0
1,111
-417
-17
0
830
0
830
-367
-16
0
731
0
731
-1
0
0
3
0
3
28
1
0
-56
0
-56
27
1
0
-54
0
-54
4.11
4.11
1.23
2.85
2.85
0.86
2.49
2.49
0.75
4.09
4.09
1.23
3.06
3.06
0.92
2.69
2.69
0.81
0.01
0.01
0.00
-0.21
-0.21
-0.06
-0.20
-0.20
-0.06
-7.1
-9.9
-20.9
-11.3
-28.1
-30.6
-6.6
-13.9
-12.5
-7.1
-10.1
-21.1
-9.8
-23.4
-25.3
-5.4
-13.2
-12.0
0.0
0.2
0.2
-1.5
-4.7
-5.2
-1.2
-0.7
-0.6
-1,343
1,309
2,183
-862
1,371
1,698
-812
1,588
1,445
-1,338
1,316
2,193
-887
1,526
1,835
-769
1,633
1,362
-5
-7
-10
25
-155
-137
-43
-45
83
(NOKm)
Revenues
Operating expenses
EBITDA
EBITDA adj
EBITDA margin (%)
Capex
Working capital
NIBD adj
Source: DNB Markets
23
24
DNB Markets
12 March 2015
Quarterly numbers
(NOKm)
Revenues
Q1 2014
7,437
Q2 2014
8,043
Q3 2014
8,271
-6,814
623
-7,459
587
-7,654
617
-8,369
786
-7,513
695
-7,384
686
-6,846
604
-6,382
530
-6,420
514
-131
0
492
-128
0
459
-146
0
471
-148
-70
568
-148
0
546
-148
0
538
-148
0
456
-148
0
382
-146
0
368
-10
482
-11
448
-11
460
-11
557
-12
535
-12
526
-12
444
-12
370
-13
355
Net interest
FX gains
Net financial items
Non-recurring items
PBT
-27
-106
-133
0
349
-17
73
56
0
504
-2
-32
-34
0
426
-92
116
24
-105
476
-43
0
-43
0
492
-50
0
-50
0
476
-47
0
-47
0
396
-43
0
-43
0
327
-44
0
-44
0
311
Taxes
Minorities
Discontinued operations
Net profit
Adjustments to net profit
Net profit adj
-108
-2
0
239
0
239
-137
-5
0
362
-2
360
-155
-6
0
265
31
296
-117
-7
0
352
128
480
-162
-5
0
325
0
325
-157
-5
0
314
0
314
-131
-5
0
261
0
261
-108
-4
0
215
0
215
-103
-4
0
204
0
204
-394
0.88
0.88
0.00
1.33
1.32
0.00
0.97
1.09
0.00
1.30
1.77
0.00
1.20
1.20
0.00
1.16
1.16
0.00
0.96
0.96
0.00
0.79
0.79
0.00
0.75
0.75
0.00
nm
nm
nm
8.1
nm
nm
2.8
nm
nm
10.7
nm
nm
-10.3
10.4
36.2
-1.7
0.3
-12.6
-7.7
-9.9
-11.7
-7.2
-24.5
-55.3
0.3
-15.5
-37.2
nm
8.4
-1.8
6.5
3.2
nm
7.3
-1.6
5.5
4.6
nm
8.0
-1.8
6.1
3.3
nm
8.6
-1.6
6.8
3.9
nm
8.5
-1.8
6.5
4.0
nm
8.5
-1.8
6.5
4.0
nm
8.1
-2.0
6.0
3.6
nm
7.7
-2.1
5.3
3.2
nm
7.4
-2.1
5.1
3.0
Operating expenses
EBITDA
Depreciation
Impairment of PPE
EBITA
Amortisation
EBIT
Dividend paid
Per share data (NOK)
EPS
EPS adj
DPS
Growth and margins (%)
Revenues, QOQ growth
Revenues, YOY growth
EPS adj, YOY growth
Gross margin
EBITDA adj margin
Depreciation/revenues
EBIT adj margin
Net profit margin
24
25
DNB Markets
12 March 2015
Q1 2014
623
0
0
623
Q2 2014
587
-3
0
584
Q3 2014
617
0
43
660
EBITA
Gains and losses
Other EBITA adjustments
EBITA adj
492
0
0
492
459
-3
0
456
471
0
43
514
568
0
0
568
546
0
0
546
538
0
0
538
456
0
0
456
382
0
0
382
368
0
0
368
EBIT
Gains and losses
Other EBIT adjustments
EBIT adj
482
0
0
482
448
-3
0
445
460
0
43
503
557
0
0
627
535
0
0
535
526
0
0
526
444
0
0
444
370
0
0
370
355
0
0
355
Net profit
Gains and losses
Other EBIT adjustments
Tax adjustments
Other adjustments
Net profit adj
239
0
0
0
0
239
362
-3
0
1
0
360
265
0
43
-12
0
296
352
0
0
-47
0
480
325
0
0
0
0
325
314
0
0
0
0
314
261
0
0
0
0
261
215
0
0
0
0
215
204
0
0
0
0
204
Q1 2014
Q2 2014
Q3 2014
4,060
862
2,583
-24
4,660
904
2,546
-50
5,049
851
2,403
-28
5,461
1,281
2,474
-61
5,100
988
2,160
-40
5,080
950
2,080
-40
4,620
950
1,920
-40
4,200
912
1,840
-40
4,238
950
1,786
-40
252
83
153
36
404
79
49
-63
400
90
53
-84
417
134
86
-80
402
96
62
-25
400
92
59
-25
328
87
53
-25
265
79
51
-25
248
83
50
-25
6.2%
9.6%
5.9%
8.7%
8.7%
1.9%
7.9%
10.6%
2.2%
7.6%
10.5%
3.5%
7.9%
9.7%
2.9%
7.9%
9.7%
2.8%
7.1%
9.2%
2.8%
6.3%
8.6%
2.8%
5.8%
8.7%
2.8%
362
91
167
45
519
84
59
-54
531
103
73
-91
584
191
102
-91
536
109
76
-25
533
105
73
-25
462
100
67
-25
399
91
64
-25
381
95
62
-25
EBITDA margin
Subsea
Engineering
MMO
8.9%
10.6%
6.5%
11.1%
9.3%
2.3%
10.5%
12.1%
3.0%
10.7%
14.9%
4.1%
10.5%
11.0%
3.5%
10.5%
11.0%
3.5%
10.0%
10.5%
3.5%
9.5%
10.0%
3.5%
9.0%
10.0%
3.5%
Assumptions
Order intake
Order backlog
Book to bill
5,897
39,572
0.79
21,407
53,914
2.66
3,629
48,986
0.44
6,203
48,289
0.68
9,625
49,720
1.17
5,125
46,735
0.64
5,125
44,370
0.69
5,125
42,543
0.74
3,500
30,171
0.50
25
26
DNB Markets
12 March 2015
Annual P&L
(NOKm)
Revenues
2011
22,081
2012
28,345
2013
29,058
2014
32,971
2015e
30,640
2016e
27,190
2017e
25,390
-21,074
1,009
-26,125
2,248
-26,979
2,079
-30,296
2,675
-28,126
2,514
-25,208
1,982
-23,624
1,766
-261
0
748
-317
0
1,931
-459
0
1,620
-552
-70
2,053
-592
0
1,922
-584
0
1,398
-553
0
1,214
Amortisation
EBIT
-40
708
-40
1,891
-40
1,580
-43
2,010
-48
1,874
-51
1,347
-54
1,160
Net interest
FX gains
Net financial items
Non-recurring items
PBT
11
24
35
0
743
-156
-11
-167
0
1,724
-183
180
-3
0
1,577
-139
51
-88
-105
1,817
-183
0
-183
0
1,691
-168
0
-168
0
1,179
-128
0
-128
0
1,032
-253
34
-34
0
456
419
875
-479
28
-10
0
1,235
-20
1,215
-397
25
-7
0
1,173
0
1,173
-516
28
-21
0
1,280
128
1,408
-558
33
-19
0
1,114
0
1,114
-389
33
-16
0
774
0
774
-341
33
-15
0
677
0
677
-394
-334
-232
1.68
3.21
0.00
4.54
4.47
0.00
4.31
4.31
0.00
4.71
5.19
1.45
4.11
4.11
1.23
2.85
2.85
0.86
2.49
2.49
0.75
nm
nm
28.4
39.0
2.5
-3.5
13.5
20.4
-7.1
-20.9
-11.3
-30.6
-6.6
-12.5
nm
4.6
7.3
-1.2
3.2
5.9
3.4
2.2
nm
7.9
7.8
-1.1
6.7
6.6
6.1
4.4
nm
7.2
7.2
-1.6
5.4
5.4
5.4
4.1
nm
8.1
8.1
-1.7
6.1
6.3
5.5
3.9
nm
8.2
8.2
-1.9
6.1
6.1
5.5
3.7
nm
7.3
7.3
-2.1
5.0
5.0
4.3
2.9
nm
7.0
7.0
-2.2
4.6
4.6
4.1
2.7
Operating expenses
EBITDA
Depreciation
Impairment of PPE
EBITA
Taxes
Effective tax rate (%)
Minorities
Discontinued operations
Net profit
Adjustments to net profit
Net profit adj
Dividend paid
Per share data (NOK)
EPS
EPS adj
DPS
Growth and margins (%)
Revenue growth
EPS adj growth
Gross margin
EBITDA margin
EBITDA adj margin
Depreciation/revenues
EBIT margin
EBIT adj margin
PBT margin
Net profit margin
Source: Company, DNB Markets
26
27
DNB Markets
12 March 2015
2011
1,009
-2
600
1,607
2012
2,248
-28
0
2,220
2013
2,079
0
0
2,079
2014
2,675
0
0
2,675
2015e
2,514
0
0
2,514
2016e
1,982
0
0
1,982
2017e
1,766
0
0
1,766
EBITA
Gains and losses
Other EBITA adjustments
EBITA adj
748
-2
600
1,346
1,931
-28
0
1,903
1,620
0
0
1,620
2,053
0
0
2,053
1,922
0
0
1,922
1,398
0
0
1,398
1,214
0
0
1,214
EBIT
Gains and losses
Other EBIT adjustments
EBIT adj
708
-2
600
1,306
1,891
-28
0
1,863
1,580
0
0
1,580
2,010
0
0
2,080
1,874
0
0
1,874
1,347
0
0
1,347
1,160
0
0
1,160
Net profit
Gains and losses
Other EBIT adjustments
Tax adjustments
Other adjustments
Net profit adj
456
-2
600
-179
0
875
1,235
-28
0
8
0
1,215
1,173
0
0
0
0
1,173
1,280
0
0
-47
0
1,408
1,114
0
0
0
0
1,114
774
0
0
0
0
774
677
0
0
0
0
677
1.68
1.53
3.21
4.54
-0.07
4.47
4.31
0.00
4.31
4.71
0.48
5.19
4.11
0.00
4.11
2.85
0.00
2.85
2.49
0.00
2.49
27
28
DNB Markets
12 March 2015
Cash flow
(NOKm)
Net profit
Depreciation and amortisation
Other non-cash adjustments
Change in net working capital
Cash flow from operations (CFO)
2011
456
301
155
-309
603
2012
1,235
357
482
-660
1,414
2013
1,173
499
122
865
2,659
2014
1,280
595
-108
869
2,645
2015e
1,114
640
19
-1,996
-223
2016e
774
635
16
-62
1,364
2017e
677
606
15
-218
1,080
Capital expenditure
Acquisitions
Divestments
Cash flow from investing (CFI)
-464
-165
3
-626
-1,269
-65
22
-1,312
-1,494
-619
5
-2,108
-1,370
0
0
-1,370
-1,343
0
0
-1,343
-862
0
0
-862
-812
0
0
-812
-23
102
551
1,275
-1,566
502
268
-2
0
0
-980
-982
2,666
0
0
-2,880
-214
-136
0
0
893
757
281
0
0
-2,680
-2,399
-749
-394
0
0
-1,143
-9
-334
0
0
-343
0
-232
0
0
-232
-1,005
-112
1,308
-1,124
-2,709
158
36
FCFF calculation
Free cash flow
Less: net interest
Less: tax shields/other
Less: acquisitions
Less: divestments
Free cash flow to the firm
-23
-11
-90
165
-3
38
102
156
-511
65
-22
-210
551
183
-340
619
-5
1,008
1,275
139
177
0
0
1,591
-1,566
183
15
0
0
-1,369
502
168
-1
0
0
668
268
128
4
0
0
400
Growth (%)
CFO
CFI
FCF
CFF
FCFF
nm
nm
nm
nm
nm
134.5
-109.6
543.5
78.2
-657.4
88.0
-60.7
440.2
453.7
578.7
-0.5
35.0
131.4
-416.9
57.9
-108.4
2.0
-222.8
52.4
-186.0
711.3
35.8
132.0
70.0
148.8
-20.8
5.7
-46.6
32.4
-40.1
28
29
DNB Markets
12 March 2015
Balance sheet
(NOKm)
Assets
2011
17,181
2012
20,238
2013
25,774
2014
27,867
2015e
24,232
2016e
23,836
2017e
24,026
Inventories
Trade receivables
Other receivables
Current financial assets
Cash and cash equivalents
Current assets
498
7,239
289
266
3,267
11,559
612
9,322
494
96
3,155
13,679
588
11,041
371
698
4,463
17,161
862
12,518
188
1,187
3,339
18,094
691
11,059
188
1,187
630
13,756
653
10,317
188
1,187
789
13,133
635
10,283
188
1,187
825
13,117
1,894
3,427
11
290
5,622
2,365
3,833
11
350
6,559
3,072
5,080
17
444
8,613
3,603
5,763
27
380
9,773
3,820
6,249
27
380
10,476
3,723
6,573
27
380
10,703
3,644
6,858
27
380
10,909
Total assets
17,181
20,238
25,774
27,867
24,232
23,836
24,026
17,181
20,238
25,774
27,867
24,232
23,836
24,026
6,167
166
4,424
154
6,313
156
5,677
216
6,397
235
6,837
252
7,282
266
Total equity
6,333
4,578
6,469
5,893
6,633
7,089
7,548
Trade payables
Other payables and accruals
Short-term debt
Total current liabilities
7,036
1,118
505
8,659
8,696
1,629
644
10,969
10,976
2,980
14
13,970
13,551
3,204
674
17,429
9,953
3,176
674
13,803
9,141
3,145
674
12,961
8,887
3,131
674
12,691
Long-term debt
Deferred tax liabilities
Pension liabilities
Other non-current liabilities
Total non-current liabilities
747
742
640
60
2,189
3,063
1,033
520
75
4,691
3,533
1,203
524
75
5,335
3,154
699
670
22
4,545
2,405
699
670
22
3,796
2,396
699
670
22
3,787
2,396
699
670
22
3,787
Total liabilities
10,848
15,660
19,305
21,974
17,599
16,748
16,478
17,181
20,238
25,774
27,867
24,232
23,836
24,026
Key metrics
Net interest bearing debt
Invested capital
-2,153
7,795
455
9,501
-1,022
12,207
398
12,461
2,358
15,160
2,190
15,449
2,154
15,872
29
30
DNB Markets
12 March 2015
Valuation ratios
(NOKm)
Enterprise value
Share price (NOK)
Number of shares (m)
Market capitalisation
Net interest bearing debt
Adjustments to NIBD
Net interest bearing debt adj
EV
EV adj
Valuation
EPS
EPS adj
DPS
P/E
P/E adj
P/B
Average ROE
Dividend yield
Free cash flow yield
EV/SALES
EV/SALES adj
EV/EBITDA
EV/EBITDA adj
EV/EBIT
EV/EBIT adj
EV/capital employed
EV/NOPLAT
2011
2012
2013
272.0
272.0
272.0
-2,153
155
-1,998
455
143
598
-1,022
139
-883
1.68
3.21
0.00
4.54
4.47
0.00
4.31
4.31
0.00
22.6%
21.2%
2014
2015e
2016e
2017e
41.55
272.0
11,303
398
200
598
11,701
11,901
39.68
272.0
10,795
2,358
-174
2,183
13,152
12,978
39.68
272.0
10,795
2,190
-492
1,698
12,985
12,493
39.68
272.0
10,795
2,154
-710
1,445
12,949
12,239
4.71
5.19
1.45
8.8
8.0
1.99
20.7%
3.5%
11.1%
4.11
4.11
1.23
9.7
9.7
1.68
17.8%
3.1%
-14.2%
2.85
2.85
0.86
13.9
13.9
1.58
11.3%
2.2%
4.5%
2.49
2.49
0.75
15.9
15.9
1.48
9.3%
1.9%
2.4%
0.35
0.36
4.4
4.4
5.8
5.7
1.3
8.2
0.43
0.42
5.2
5.2
7.0
6.9
1.4
9.9
0.48
0.46
6.6
6.3
9.6
9.3
1.3
13.6
0.51
0.48
7.3
6.9
11.2
10.6
1.2
15.7
30
31
DNB Markets
12 March 2015
2012
2013
2014
2015e
2016e
2017e
6.6
24.0
19.8
5.1
17.6
15.6
4.8
21.5
17.5
4.3
19.7
16.8
3.2
13.9
12.6
2.8
11.5
10.8
8.6
2.0
283.3
8.3
3.2
298.3
38.5
22.3
27.1
15.7
10.6
0.6
238.0
25.3
14.9
17.8
10.5
10.9
-2.1
264.6
29.7
16.6
20.6
11.6
12.5
4.3
202.1
24.6
13.9
17.0
9.6
13.7
5.0
176.0
15.7
9.1
10.8
6.2
14.4
6.3
160.0
13.6
7.8
9.2
5.3
-0.1
0.4
1.9
2.7
5.0
9.2
130.0
7.0
-220.4
2.1
177.8
0.0
111.4
12.9
-9.1
4.5
400.3
0.0
178.0
19.0
111.5
5.1
325.5
0.0
3.9
11.3
8.0
23.4
193.1
15.2
-87.8
4.2
248.2
30.8
-5.1
-14.5
-0.7
-2.1
-16.6
-1.6
-243.1
4.4
226.9
30.0
1.8
4.6
5.0
12.6
158.2
10.5
20.5
3.2
147.7
30.0
1.1
2.5
4.3
10.0
133.0
8.5
5.3
3.2
147.0
30.0
5.52
4.45
8.47
-91.73
-2.13
0.07
9.07
8.80
8.85
14.41
0.20
0.18
6.94
6.72
6.89
11.36
-0.49
0.14
10.17
9.85
10.06
19.24
0.15
0.14
0.25
0.22
8.45
8.25
8.46
13.75
0.94
0.13
0.22
0.18
7.35
7.25
7.53
11.83
1.11
0.13
0.22
0.18
7.80
7.64
7.99
13.84
1.22
0.13
0.22
0.18
124.4
126.4
143.3
140.7
134.0
141.0
150.5
Profitability (%)
ROA
ROCE
ROCE after tax
Return on invested capital (%)
Net PPE/revenues
Working capital/revenues
Revenues/invested capital (pre-GW)
Pre-tax ROIC (pre-goodwill)
Pre-tax ROIC (incl. goodwill)
After-tax ROIC (pre-goodwill)
After-tax ROIC (incl. goodwill)
Cash flow ratios (%)
FCF/revenues
FCF/market capitalisation
CFO/revenues
CFO/market capitalisation
CFO/capex
CFO/current liabilities
Cash conversion ratio
Capex/revenues
Capex/depreciation
Total payout ratio
Leverage and solvency (x)
Interest cover
EBIT/interest payable
EBITA adj/interest payable
Cash coverage
Net debt/EBITDA
Total debt/total capital (BV)
Total debt/total capital (MV)
LTD / (LTD + equity (MV))
Cash conversion cycle
Receivables turnover days
Source: Company, DNB Markets
31
32
DNB Markets
12 March 2015
SAIPEM
Expect yet another challenging year
At 21x 2015e earnings, you need strong conviction in
its long-term earnings recovery to become bullish on
Saipem. 2015 is set to become yet another challenging
year and we believe a net debt to EBITDA at 3.7x is not
the best starting point heading into a cyclical downturn.
The offshore rig market continues to worsen and we
believe Offshore Drilling will be a drag on group
earnings in 2016 and 2017. New target is EUR7.0.
Earnings recovery story is falling apart. The earnings recovery story in Saipem is
falling apart as macro- and company-specific risks continue to increase and we argue
that the worst downturn in a decade is not the best time to rebuild earnings. In addition
Saipem is geared towards large field development projects (which are likely to suffer
in a cyclical downturn). Earnings have been negative for two consecutive years and
Saipem expects 2015 to be challenging as well.
Offshore drilling turning into a liability. Offshore drilling rates are collapsing due to
a large oversupply of offshore rigs and we forecast a prolonged downturn for the rig
sector. Saipem has a fleet of 16 offshore rigs and we forecast significant earnings
erosion in the Offshore Drilling segment (~50% of group EBITDA in 2014) as the
drilling rigs roll over on new contracts in 20152017. While we forecast a drop in
utilisation and rates, we have not assumed any scrapping of rigs.
Too highly geared entering a cyclical downturn. We argue that a net debt to
EBITDA of 3.7x (per year end 2014) is too high entering a cyclical downturn, and it
should be a red flag that it does not expect net debt to normalise (at EUR2.0bn) before
year-end 2018. Pending revenue from legacy contracts is EUR1.1bn and 80% of this
is related to four contracts.
SELL reiterated as we see no reason to change our negative view. The earnings
recovery story is faltering as market fundamentals continue to deteriorate and 2015 is
set to be yet another challenging year. The offshore rig market is collapsing and we
expect investor focus to gradually turn towards potential downside risk to 2016 and
2017 earnings (and net debt progression) as Saipems offshore rigs roll off contract.
Year-end Dec
Revenue (EURm)
EBITDA adj (EURm)
EBIT adj (EURm)
PTP (EURm)
EPS rep (EUR)
EPS adj (EUR)
DPS (EUR)
Revenue growth (%)
EBITDA growth adj (%)
EPS growth adj (%)
EBITDA margin adj (%)
EV/Sales adj (x)
EV/EBITDA adj (x)
EV/EBIT adj (x)
P/E adj (x)
P/Book (x)
ROE (%)
ROCE (%)
Dividend yield (%)
Source: Company, DNB Markets
2011
12,631
2,135
1,493
1,379
2.10
2.10
0.70
13.0
16.3
9.1
16.9
1.40
8.3
11.8
15.6
3.06
20.5
18.2
2.1
2012
13,386
2,207
1,481
1,349
2.05
2.05
0.68
6.0
3.4
-2.3
16.5
1.29
7.8
11.7
14.3
2.38
17.4
15.4
2.3
2013
12,433
871
147
-30
-0.36
-0.36
0.00
-7.1
-60.5
nm
7.0
0.93
13.3
nm
nm
1.47
nm
1.4
0.0
2014
12,882
1,212
55
-120
-0.52
-0.52
0.00
3.6
39.2
nm
9.4
0.63
6.7
nm
nm
0.87
nm
0.6
0.0
2015e
11,043
1,250
482
333
0.47
0.47
0.00
-14.3
3.1
nm
11.3
0.74
6.5
16.9
20.6
0.91
4.5
5.0
0.0
2016e
10,934
1,475
692
551
0.80
0.80
0.00
-1.0
18.0
72.7
13.5
0.71
5.3
11.3
11.9
0.85
7.2
6.8
0.0
2017e
10,450
1,443
658
534
0.77
0.77
0.26
-4.4
-2.1
-3.6
13.8
0.69
5.0
10.9
12.4
0.80
6.5
6.6
2.7
SELL
TP: EUR7.00
SPM versus OSEBX (12m)
22
20
18
16
14
12
10
8
6
Mar May
Saipem
Mar
Source: Factset
SUMMARY
Recommendation (prev.)
SELL (SELL)
Share price (EUR)
9.60
Target price (previous) (EUR)
7.00 (7.60)
Upside/downside potential (%)
-27
Tickers
SPM IM, SPM.MI
CAPITAL STRUCTURE
No. of shares (m)
441.4
No. of shares fully dil. (m)
441.9
Market cap. (EURm)
4,238
NIBD adj end-2015e (EURm)
3,932
Enterprise value adj (EURm)
8,151
Net debt/EBITDA adj (x)
3.24
SHARE PRICE PERFORMANCE
Abs. 1/3/12m (%)
9/17/-44
Rel. 1/3/12m (%)
8/-1/-50
High/Low 12m (EUR)
21/7
Free float (%)
57
Source: Company, DNB Markets
UPCOMING EVENTS
Q1 2015
Q2 2015
27/04/2015
28/07/2015
2016e
0.81
0.80
-1.3
0.91
2017e
0.92
0.77
-16.2
1.11
Sales (old)
Sales (new)
Change (%)
Consensus
11,088
10,934
-1.4
11,416
10,751
10,450
-2.8
11,392
11,119
11,043
-0.7
11,830
ANALYSTS
Eirik Ronold Mathisen
eirik.mathisen@dnb.no
+47 24 16 91 91
Sveinung Alvestad
sveinung.alvestad@dnb.no
+47 24 16 91 92
Please see last pages for important information
32
33
DNB Markets
12 March 2015
19.0
15.0
EUR12.4 (29%)
EUR9.6
11.0
7.0
EUR7.0 (-27%)
EUR4.8 (-50%)
3.0
Mar 2014
Jul 2014
Nov 2014
Mar 2015
Jul 2015
Nov 2015
Current Share Price
0.0
700.0
600.0
0.0
500.0
-4.7
214.3
400.0
300.0
55.0
-7.9
435.0
EBITDA expansion
100.0
Volume growth
200.0
482.2
691.7
2016
Other
EBITDA expansion
Volume growth
2015
Other
2014
0.0
33
34
DNB Markets
12 March 2015
2015e
11,043
New
2016e
10,934
2017e
10,450
2015e
11,119
Old
2016e
11,088
2017e
10,751
2015e
-76
Change
2016e
-153
2017e
-302
Operating expenses
EBITDA
EBITDA adj
EBITDA margin (%)
-9,792
1,250
1,250
11.3
-9,460
1,475
1,475
13.5
-9,006
1,443
1,443
13.8
-9,874
1,245
1,245
11.2
-9,615
1,473
1,473
13.3
-9,221
1,530
1,530
14.2
81
5
5
0.1
155
2
2
0.2
215
-87
-87
-0.4
-768
0
482
-783
0
692
-785
0
658
-764
0
481
-781
0
692
-785
0
745
-4
0
1
-2
0
0
0
0
-87
0
482
482
0
692
692
0
658
658
0
481
481
0
692
692
0
745
745
0
1
1
0
0
0
0
-87
-87
12
-162
0
0
-150
0
333
15
-156
0
0
-141
0
551
15
-139
0
0
-124
0
534
12
-162
0
0
-150
0
331
15
-150
0
0
-135
0
557
15
-133
0
0
-118
0
627
0
0
0
0
0
0
1
0
-7
0
0
-7
0
-7
0
-7
0
0
-7
0
-93
Taxes
Minorities
Discontinued operations
Net profit
Adjustments to net profit
Net profit adj
-98
-30
0
204
0
204
-162
-35
0
353
0
353
-158
-36
0
340
0
340
-98
-30
0
204
0
204
-164
-35
0
358
0
358
-185
-36
0
406
0
406
0
0
0
1
0
1
2
0
0
-5
0
-5
28
0
0
-66
0
-66
0.47
0.47
0.00
0.80
0.80
0.00
0.77
0.77
0.26
0.46
0.46
0.00
0.81
0.81
0.00
0.92
0.92
0.31
0.00
0.00
0.00
-0.01
-0.01
0.00
-0.15
-0.15
-0.05
-14.3
776.7
nm
-1.0
43.5
72.7
-4.4
-4.8
-3.6
-13.7
774.6
-188.5
-0.3
43.8
75.7
-3.0
7.7
13.5
-0.6
2.0
nm
-0.7
-0.3
-3.0
-1.4
-12.5
-17.2
440
-650
816
3,932
440
-650
949
3,578
440
-664
818
2,985
440
-650
819
3,940
440
-660
957
3,599
440
-685
831
2,966
0
0
-3
-8
0
10
-9
-21
0
21
-14
19
Depreciation
Impairment of PPE
EBITA
Amortisation
EBIT
EBIT adj
Associated companies
Net interest
FX gains
Other financial items
Net financial items
Non-recurring items
PBT
34
35
DNB Markets
12 March 2015
New
2016e
2017e
2015e
Old
2016e
2017e
2015e
Change
2016e
2017e
5,950
3,225
1,152
705
11
5,300
3,800
1,140
684
11
4,800
3,990
967
682
10
5,900
3,300
1,203
705
11
5,200
4,000
1,186
691
11
4,800
4,200
1,051
689
11
50
-75
-51
0
0
100
-200
-46
-7
0
0
-210
-84
-7
0
EBIT
Offshore E&C
Onshore E&C
Offshore drilling
Onshore drilling
Other
335
-200
277
70
0
316
76
255
45
0
352
160
103
44
0
329
-201
279
74
0
304
80
251
57
0
352
168
161
64
0
6
2
-2
-4
0
12
-4
4
-12
0
0
-8
-58
-20
0
EBIT margin
Offshore E&C
Onshore E&C
Offshore drilling
Onshore drilling
5.6%
-6.2%
24.1%
9.9%
6.0%
2.0%
22.4%
6.5%
7.3%
4.0%
10.6%
6.5%
5.6%
-6.1%
23.2%
10.5%
5.8%
2.0%
21.2%
8.2%
7.3%
4.0%
15.3%
9.3%
0.0%
-0.1%
0.9%
-0.6%
0.1%
0.0%
1.2%
-1.7%
0.0%
0.0%
-4.7%
-2.8%
EBITDA
Offshore E&C
Onshore E&C
Offshore drilling
Onshore drilling
655
-164
537
222
636
114
525
200
672
200
373
199
649
-165
539
222
624
120
522
207
672
210
442
206
6
2
-2
0
12
-6
3
-7
0
-11
-69
-7
11.0%
-5.1%
46.6%
31.5%
4,000
9,211
3,500
6,978
12.0%
3.0%
46.1%
29.2%
4,000
7,911
4,000
7,178
14.0%
5.0%
38.5%
29.2%
4,525
7,636
2,683
5,871
11.0%
-5.0%
44.8%
31.5%
3,800
9,061
3,500
6,903
12.0%
3.0%
44.0%
29.9%
3,800
7,661
4,250
7,153
14.0%
5.0%
42.0%
29.9%
4,320
7,181
3,227
6,180
0.0%
-0.1%
1.8%
0.0%
200.0
150.0
0.00
75.00
0.0%
0.0%
2.1%
-0.8%
200.0
250.0
-250.0
25.00
0.0%
0.0%
-3.5%
-0.8%
205.0
455.0
-544.0
-309.0
(EURm)
Revenues
Offshore E&C
Onshore E&C
Offshore drilling
Onshore drilling
Other
EBITDA margin
Offshore E&C
Onshore E&C
Offshore drilling
Onshore drilling
Intake Offshore E&C
Backlog Offshore E&C
Intake Onshore E&C
Backlog Onshore E&C
Source: DNB Markets
35
36
DNB Markets
12 March 2015
Quarterly numbers
(EURm)
Revenues
Q3 2013
3,524
Q4 2013
3,306
Q1 2014
2,893
Q2 2014
3,077
Q3 2014
3,512
-3,131
393
-2,964
342
-2,590
303
-2,725
352
-3,175
337
-3,180
220
-2,545
302
-2,549
327
-2,402
321
-2,298
300
-184
0
209
-181
0
161
-176
0
127
-186
0
166
-187
0
150
-198
-410
-388
-192
0
110
-192
0
135
-192
0
129
-192
0
108
Amortisation
EBIT
0
209
0
161
0
127
0
166
0
150
0
-388
0
110
0
135
0
129
0
108
-54
4
159
-44
1
118
-49
12
90
-61
5
110
-52
13
111
-37
-6
-431
-41
3
72
-41
3
97
-40
3
93
-40
3
72
Taxes
Minorities
Discontinued operations
Net profit
Adjustments to net profit
Net profit adj
-50
-8
0
101
0
101
-41
-7
0
70
0
70
-29
0
0
61
0
61
-35
0
0
75
0
75
-35
0
0
76
0
76
-19
8
0
-442
0
-442
-21
0
0
51
0
51
-29
0
0
68
0
68
-27
0
0
65
-21
0
0
51
0
51
440
440
440
440
440
440
440
440
440
440
0.23
0.23
0.16
0.16
0.14
0.14
0.17
0.17
0.17
0.17
-1.01
-1.01
0.11
0.11
0.16
0.16
0.15
0.11
0.11
68.0
-0.8
-59.5
-6.2
-3.5
-61.1
-12.5
-6.4
-44.5
6.4
46.7
nm
14.1
-0.3
-24.8
-3.2
2.8
nm
-16.3
-1.6
-17.2
1.0
-6.6
-9.1
-5.3
-22.5
nm
-4.6
-23.6
nm
nm
11.2
-5.2
5.9
3.1
nm
10.3
-5.5
4.9
2.3
nm
10.5
-6.1
4.4
2.1
nm
11.4
-6.0
5.4
2.4
nm
9.6
-5.3
4.3
2.2
nm
6.5
-5.8
nm
nm
nm
10.6
-6.7
3.9
1.8
nm
11.4
-6.7
4.7
2.4
nm
11.8
-7.1
4.7
2.4
nm
11.6
-7.4
4.2
1.9
Operating expenses
EBITDA
Depreciation
Impairment of PPE
EBITA
36
37
DNB Markets
12 March 2015
Q3 2013
393
393
Q4 2013
342
342
Q1 2014
303
303
Q2 2014
352
352
Q3 2014
337
337
EBITA
Other EBITA adjustments
EBITA adj
209
0
209
161
0
161
127
0
127
166
0
166
150
0
150
-388
0
-388
110
0
110
135
0
135
129
0
129
108
0
108
EBIT
Other EBIT adjustments
EBIT adj
209
0
209
161
0
161
127
0
127
166
0
166
150
0
150
-388
0
-388
110
0
110
135
0
135
129
0
129
108
0
108
Net profit
Other EBIT adjustments
Tax adjustments
Net profit adj
101
0
0
101
70
0
0
70
61
0
0
61
75
0
0
75
76
0
0
76
-442
0
0
-442
51
0
0
51
68
0
0
68
65
0
51
0
0
51
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
1,646
1,404
284
188
2
1,400
1,426
285
192
3
1,505
935
284
167
2
1,679
955
272
169
2
2,022
981
322
184
3
1,996
894
314
194
2
1,450
925
293
176
3
1,600
800
295
178
3
1,500
750
295
176
3
1,400
750
270
176
3
EBIT
Offshore E&C
Onshore E&C
Offshore drilling
Onshore drilling
96
-5
92
26
86
-45
95
25
60
-29
79
17
120
-52
76
22
113
-84
96
25
-18
-246
-151
27
80
-65
76
19
96
-57
76
20
85
-47
75
16
74
-32
50
16
EBIT margin
Offshore E&C
Onshore E&C
Offshore drilling
Onshore drilling
5.8%
-0.4%
32.4%
13.8%
6.1%
-3.2%
33.3%
13.0%
4.0%
-3.1%
27.8%
10.2%
7.1%
-5.4%
27.9%
13.0%
5.6%
-8.6%
29.8%
13.6%
-0.9%
-27.5%
-48.1%
13.9%
5.5%
-7.0%
25.9%
10.7%
6.0%
-7.1%
25.9%
11.0%
5.7%
-6.2%
25.4%
9.0%
5.3%
-4.2%
18.5%
9.0%
EBITDA
Offshore E&C
Onshore E&C
Offshore drilling
Onshore drilling
173
3
156
61
162
-39
159
60
126
-19
142
54
201
-43
136
58
188
-75
162
62
217
-236
172
67
160
-56
141
57
176
-48
141
58
165
-38
140
54
154
-23
115
54
EBITDA margin
Offshore E&C
Onshore E&C
Offshore drilling
Onshore drilling
10.5%
0.2%
54.9%
32.4%
11.6%
-2.7%
55.8%
31.3%
8.4%
-2.0%
50.0%
32.3%
12.0%
-4.5%
50.0%
34.3%
9.3%
-7.6%
50.3%
33.7%
10.9%
-26.4%
54.8%
34.5%
11.0%
-6.0%
48.1%
32.3%
11.0%
-6.0%
48.0%
32.3%
11.0%
-5.0%
47.5%
30.7%
11.0%
-3.0%
42.6%
30.7%
Assumptions
Order intake
Order backlog
Intake Offshore E&C
Backlog Offshore E&C
Intake Onshore E&C
Backlog Onshore E&C
1,410
19,520
711.0
9,731
220.0
5,472
2,092
17,514
911.0
8,447
390.0
4,436
3,949
18,526
2,752
9,657
975.0
4,467
9,232
24,215
5,527
13,374
3,355
6,552
1,856
22,562
1,056
12,408
154.0
5,725
2,983
22,147
749.0
11,161
1,872
6,703
3,264
22,567
1,884
11,595
875.0
6,653
2,085
21,780
705.3
10,700
875.0
6,728
2,095
21,155
705.3
9,906
875.0
6,853
2,095
20,655
705.3
9,211
875.0
6,978
37
38
DNB Markets
12 March 2015
Annual P&L
(EURm)
Revenues
2008
10,138
2009
10,319
2010
11,177
2011
12,631
2012
13,386
2013
12,433
2014
12,882
2015e
11,043
2016e
10,934
2017e
10,450
Operating expenses
EBITDA
-8,701
1,437
-8,723
1,596
-9,341
1,836
-10,496
2,135
-11,179
2,207
-11,562
871
-11,670
1,212
-9,792
1,250
-9,460
1,475
-9,006
1,443
Depreciation
Impairment of PPE
EBITA
-353
0
1,084
-440
0
1,156
-514
-3
1,319
-608
-34
1,493
-726
0
1,481
-724
0
147
-747
-410
55
-768
0
482
-783
0
692
-785
0
658
Amortisation
EBIT
0
1,084
0
1,156
0
1,319
0
1,493
0
1,481
0
147
0
55
0
482
0
692
0
658
Associated companies
Net interest
FX gains
Other financial items
Net financial items
Non-recurring items
PBT
22
-121
-42
68
-73
207
1,218
7
-58
43
-85
-93
0
1,063
0
-56
-88
34
-110
30
1,239
16
-98
36
-71
-117
3
1,379
17
-124
-98
74
-131
-1
1,349
13
-146
4
-48
-177
0
-30
20
-184
55
-70
-179
4
-120
12
-162
0
0
-150
0
333
15
-156
0
0
-141
0
551
15
-139
0
0
-124
0
534
Taxes
Effective tax rate (%)
Minorities
Discontinued operations
Net profit
Adjustments to net profit
Net profit adj
-285
23
-18
0
915
0
915
-288
27
-43
0
732
0
732
-345
28
-50
0
844
0
844
-392
28
-66
0
921
0
921
-393
29
-54
0
902
0
902
-106
-353
-23
0
-159
0
-159
-118
-98
8
0
-230
0
-230
-98
30
-30
0
204
0
204
-162
30
-35
0
353
0
353
-158
30
-36
0
340
0
340
Dividend paid
Avg. number of shares
-192
442
-239
440
-263
441
-297
440
-352
440
-375
440
-44
440
0
440
0
440
0
440
2.10
2.10
0.55
1.68
1.68
0.55
1.93
1.93
0.63
2.10
2.10
0.70
2.05
2.05
0.68
-0.36
-0.36
0.00
-0.52
-0.52
0.00
0.47
0.47
0.00
0.80
0.80
0.00
0.77
0.77
0.26
5.6
4.8
1.8
-19.9
8.3
14.6
13.0
9.1
6.0
-2.3
-7.1
nm
3.6
nm
-14.3
nm
-1.0
72.7
-4.4
-3.6
nm
14.2
14.2
-3.5
10.7
10.7
12.0
9.2
nm
15.5
15.5
-4.3
11.2
11.2
10.3
7.5
nm
16.4
16.4
-4.6
11.8
11.8
11.1
8.0
nm
16.9
16.9
-4.8
11.8
11.8
10.9
7.8
nm
16.5
16.5
-5.4
11.1
11.1
10.1
7.1
nm
7.0
7.0
-5.8
1.2
1.2
nm
nm
nm
9.4
9.4
-5.8
0.4
0.4
nm
nm
nm
11.3
11.3
-7.0
4.4
4.4
3.0
2.1
nm
13.5
13.5
-7.2
6.3
6.3
5.0
3.5
nm
13.8
13.8
-7.5
6.3
6.3
5.1
3.6
38
39
DNB Markets
12 March 2015
2008
1,437
1,437
2009
1,596
1,596
2010
1,836
1,836
2011
2,135
2,135
2012
2,207
2,207
2013
871
871
2014
1,212
1,212
2015e
1,250
1,250
2016e
1,475
1,475
2017e
1,443
1,443
EBITA
Other EBITA adjustments
EBITA adj
1,084
0
1,084
1,156
0
1,156
1,319
0
1,319
1,493
0
1,493
1,481
0
1,481
147
0
147
55
0
55
482
0
482
692
0
692
658
0
658
EBIT
Other EBIT adjustments
EBIT adj
1,084
0
1,084
1,156
0
1,156
1,319
0
1,319
1,493
0
1,493
1,481
0
1,481
147
0
147
55
0
55
482
0
482
692
0
692
658
0
658
Net profit
Other EBIT adjustments
Tax adjustments
Net profit adj
915
0
0
915
732
0
0
732
844
0
0
844
921
0
0
921
902
0
0
902
-159
0
0
-159
-230
0
0
-230
204
0
0
204
353
0
0
353
340
0
0
340
2.10
0.00
2.10
1.68
0.00
1.68
1.93
0.00
1.93
2.10
0.00
2.10
2.05
0.00
2.05
-0.36
0.00
-0.36
-0.52
0.00
-0.52
0.47
0.00
0.47
0.80
0.00
0.80
0.77
0.00
0.77
2008
915
353
171
658
2,096
2009
732
440
128
-331
967
2010
844
514
186
-220
1,324
2011
921
608
194
-174
1,549
2012
902
726
55
-1,434
224
2013
-159
724
-341
202
426
2014
-230
747
333
301
1,151
2015e
204
768
20
33
1,025
2016e
353
783
22
-133
1,026
2017e
340
785
23
131
1,280
-2,031
-3
350
-1,684
-1,601
0
204
-1,397
-1,533
-4
138
-1,399
-1,100
0
71
-1,029
-1,002
-1
9
-994
-893
0
435
-458
-694
-2
47
-649
-650
0
0
-650
-650
0
0
-650
-664
0
0
-664
412
-430
-75
520
-770
-32
502
375
376
616
-203
-192
-50
-703
-1,148
219
-239
7
31
18
259
-263
35
-48
-17
20
-297
11
-155
-421
1,419
-352
29
-30
1,066
525
-375
0
-91
59
-304
-44
0
-87
-435
-333
0
0
0
-333
-568
0
0
0
-568
-488
0
0
0
-488
-736
-412
-92
99
296
27
67
42
-192
128
FCFF calculation
Free cash flow
Less: net interest
Less: acquisitions
Less: divestments
412
121
3
-350
-430
58
0
-204
-75
56
4
-138
520
98
0
-71
-770
124
1
-9
-32
146
0
-435
502
184
2
-47
375
162
0
0
376
156
0
0
616
139
0
0
97.4
-40.8
407.5
-217.4
nm
-53.9
17.0
-204.4
101.6
nm
36.9
-0.1
82.6
-194.4
nm
17.0
26.4
793.3
-2376.5
nm
-85.5
3.4
-248.1
353.2
nm
90.2
53.9
95.8
-94.5
nm
170.1
-41.7
1667.2
-837.3
nm
-10.9
-0.2
-25.2
23.4
nm
0.1
0.1
0.3
-70.6
nm
24.8
-2.2
63.8
14.1
nm
Cash flow
(EURm)
Net profit
Depreciation and amortisation
Other non-cash adjustments
Change in net working capital
Cash flow from operations (CFO)
Capital expenditure
Acquisitions
Divestments
Cash flow from investing (CFI)
Free cash flow (FCF)
Growth (%)
CFO
CFI
FCF
CFF
FCFF
Source: Company, DNB Markets
39
40
DNB Markets
12 March 2015
Balance sheet
(EURm)
Assets
2008
13,993
2009
14,113
2010
15,028
2011
15,852
2012
17,195
2013
17,043
2014
15,897
2015e
15,784
2016e
15,339
2017e
15,029
Inventories
Trade receivables
Other receivables
Current financial assets
Cash and cash equivalents
Current assets
1,397
4,255
0
758
1,434
7,844
1,071
4,040
0
654
1,022
6,787
791
4,330
0
565
930
6,616
1,353
3,504
0
832
1,029
6,718
2,332
3,252
0
897
1,325
7,806
2,297
3,286
26
940
1,352
7,901
2,188
2,781
0
815
1,419
7,203
1,765
3,199
0
773
1,461
7,198
1,859
2,952
0
793
1,269
6,874
1,672
2,821
0
781
1,397
6,672
5,171
755
42
94
19
6,149
6,295
756
118
113
44
7,326
7,403
760
115
90
44
8,412
8,024
752
109
100
149
9,134
8,254
756
116
88
175
9,389
7,972
758
126
132
154
9,142
7,480
759
177
139
139
8,694
7,362
759
187
139
139
8,586
7,229
759
200
139
139
8,466
7,107
759
213
139
139
8,357
Total assets
13,993
14,113
15,028
15,852
17,195
17,043
15,897
15,784
15,339
15,029
13,993
14,113
15,028
15,852
17,195
17,043
15,897
15,784
15,339
15,029
2,757
21
3,434
61
4,060
94
4,709
114
5,405
148
4,652
92
4,407
40
4,611
70
4,965
105
5,305
141
Total equity
2,778
3,495
4,154
4,823
5,553
4,744
4,447
4,681
5,070
5,446
Trade payables
Other payables and accruals
Short-term debt
Total current liabilities
6,370
687
2,620
9,677
5,735
466
2,147
8,348
5,814
422
1,329
7,565
5,341
900
1,722
7,963
4,982
472
2,140
7,594
5,280
389
3,257
8,926
4,758
428
2,415
7,601
4,744
428
1,394
6,566
4,479
428
1,394
6,301
4,280
428
1,394
6,102
Long-term debt
Deferred tax liabilities
Pension liabilities
Other non-current liabilities
Total non-current liabilities
1,106
25
173
234
1,538
1,796
64
182
228
2,270
2,887
55
193
174
3,309
2,576
79
200
211
3,066
3,543
122
217
166
4,048
2,859
81
233
200
3,373
3,428
26
221
174
3,849
4,116
26
221
174
4,537
3,548
26
221
174
3,969
3,060
26
221
174
3,481
Total liabilities
11,215
10,618
10,874
11,029
11,642
12,299
11,450
11,103
10,270
9,583
13,993
14,113
15,028
15,852
17,195
17,043
15,897
15,784
15,339
15,029
2,292
5,480
2,921
6,837
3,286
7,917
3,269
8,756
4,358
10,636
4,764
10,121
4,424
9,475
4,049
9,232
3,673
9,226
3,057
8,949
Key metrics
Net interest bearing debt
Invested capital
Source: Company, DNB Markets
40
41
DNB Markets
12 March 2015
Valuation ratios
(EURm)
Enterprise value
Share price (EUR)
Number of shares (m)
Market capitalisation
Net interest bearing debt
Adjustments to NIBD
Net interest bearing debt adj
EV
EV adj
2008
2009
2010
2011
2012
2013
2014
2015e
2016e
2017e
11.82
435.1
5,142
2,292
-21
2,271
7,434
7,413
24.10
435.8
10,502
2,921
-57
2,864
13,423
13,366
36.84
437.7
16,125
3,286
-21
3,265
19,411
19,390
32.85
438.3
14,397
3,269
5
3,274
17,666
17,671
29.30
439.4
12,875
4,358
32
4,390
17,233
17,265
15.56
439.5
6,838
4,764
-34
4,730
11,602
11,568
8.77
439.5
3,852
4,424
-137
4,287
8,276
8,139
9.60
439.5
4,219
4,049
-117
3,932
8,268
8,151
9.60
439.5
4,219
3,673
-95
3,578
7,892
7,797
9.60
439.5
4,219
3,057
-72
2,985
7,276
7,204
Valuation
EPS
EPS adj
DPS
P/E
P/E adj
P/B
Average ROE
Earnings yield adj
Dividend yield
Free cash flow yield
2.10
2.10
0.55
5.6
5.6
1.87
36.0%
17.5%
4.7%
8.0%
1.68
1.68
0.55
14.3
14.3
3.06
23.3%
6.9%
2.3%
-4.1%
1.93
1.93
0.63
19.1
19.1
3.97
22.1%
5.2%
1.7%
-0.5%
2.10
2.10
0.70
15.6
15.6
3.06
20.5%
6.4%
2.1%
3.6%
2.05
2.05
0.68
14.3
14.3
2.38
17.4%
7.0%
2.3%
-5.9%
-0.36
-0.36
0.00
-43.0
-43.0
1.47
-3.1%
-2.3%
0.0%
-0.5%
-0.52
-0.52
0.00
-16.8
-16.7
0.87
-5.0%
-6.0%
0.0%
12.9%
0.47
0.47
0.00
20.6
20.6
0.91
4.5%
4.8%
0.0%
8.7%
0.80
0.80
0.00
11.9
11.9
0.85
7.2%
8.4%
0.0%
8.7%
0.77
0.77
0.26
12.4
12.4
0.80
6.5%
8.1%
2.7%
14.1%
EV/SALES
EV/SALES adj
EV/EBITDA
EV/EBITDA adj
EV/EBIT
EV/EBIT adj
EV/capital employed
EV/NOPLAT
0.73
0.73
5.2
5.2
6.9
6.8
1.1
9.9
1.30
1.30
8.4
8.4
11.6
11.6
1.9
16.8
1.74
1.73
10.6
10.6
14.7
14.7
2.4
21.3
1.40
1.40
8.3
8.3
11.8
11.8
2.1
16.8
1.29
1.29
7.8
7.8
11.6
11.7
1.6
16.9
0.93
0.93
13.3
13.3
78.9
78.7
1.2
114.4
0.64
0.63
6.8
6.7
150.5
148.0
0.9
25.8
0.75
0.74
6.6
6.5
17.1
16.9
0.8
24.9
0.72
0.71
5.4
5.3
11.4
11.3
0.8
16.5
0.70
0.69
5.0
5.0
11.1
10.9
0.7
16.0
41
42
DNB Markets
12 March 2015
2009
2010
2011
2012
2013
2014
2015e
2016e
2017e
7.1
17.0
5.2
17.0
5.8
17.4
6.0
18.2
5.5
15.4
-0.9
1.4
-1.4
0.6
1.3
5.0
2.3
6.8
2.2
6.6
51.0
-6.0
185.0
22.3
15.4
61.0
-3.7
150.9
18.8
13.0
66.2
-4.3
141.2
17.9
12.4
63.5
-3.1
144.3
17.9
12.6
61.7
8.7
125.9
15.3
10.5
64.1
8.5
122.8
1.4
1.0
58.1
6.6
136.0
0.6
3.3
66.7
7.4
119.6
5.2
3.6
66.1
8.7
118.5
7.5
5.2
68.0
7.8
116.8
7.2
5.0
4.1
8.0
20.7
40.8
103.2
21.7
-80.4
20.0
575.4
26.2
-4.2
-4.1
9.4
9.2
60.4
11.6
-56.3
15.5
363.9
32.7
-0.7
-0.5
11.8
8.2
86.4
17.5
-10.9
13.7
298.2
32.7
4.1
3.6
12.3
10.8
140.8
19.5
10.7
8.7
180.9
33.3
-5.8
-6.0
1.7
1.7
22.4
2.9
32.8
7.5
138.0
33.1
-0.3
-0.5
3.4
6.2
47.7
4.8
-17.0
7.2
123.3
0.0
3.9
13.0
8.9
29.9
165.8
15.1
-28.9
5.4
92.9
0.0
3.4
8.9
9.3
24.3
157.7
15.6
20.7
5.9
84.6
0.0
3.4
8.9
9.4
24.3
157.9
16.3
-54.3
5.9
83.0
0.0
5.9
14.6
12.2
30.3
192.8
21.0
37.7
6.4
84.6
33.0
5.63
5.21
5.21
11.88
1.59
0.27
0.42
0.18
13.92
13.60
13.60
27.52
1.83
0.28
0.27
0.15
20.73
20.61
20.61
32.79
1.79
0.28
0.21
0.15
13.03
12.87
12.87
21.79
1.53
0.27
0.23
0.15
10.69
10.58
10.58
17.80
1.97
0.33
0.31
0.22
1.01
0.86
0.86
5.97
5.47
0.36
0.47
0.29
0.31
0.29
0.29
6.59
3.65
0.37
0.60
0.47
2.89
2.84
2.84
7.74
3.24
0.35
0.57
0.49
4.15
4.07
4.07
9.44
2.49
0.32
0.54
0.46
4.40
4.31
4.31
10.36
2.12
0.30
0.51
0.42
153.2
142.9
141.4
101.3
88.7
97.2
78.8
105.7
98.6
98.6
Profitability (%)
ROA
ROCE
42
43
DNB Markets
12 March 2015
SELL
SUBSEA 7
Backlog coverage is too low
TP: NOK50.0
2011
5,476
1,003
641
627
1.31
1.30
0.60
131.2
79.4
53.1
18.3
1.18
6.4
10.1
14.3
1.09
12.0
15.3
3.2
-0.9
2012
6,297
1,139
808
1,069
2.49
1.75
0.60
15.0
13.5
35.1
18.1
1.30
7.2
10.1
13.5
1.24
13.6
11.0
2.5
-3.0
2013
6,297
981
573
511
1.04
2.11
0.60
0.0
-13.9
20.4
15.6
1.07
6.8
11.7
9.1
0.98
5.4
7.4
3.1
3.5
2014
6,870
1,437
-243
-218
-1.04
2.56
0.00
9.1
46.6
21.5
20.9
0.49
2.3
nm
4.0
0.60
nm
nm
0.0
15.9
2015e
5,300
970
540
524
1.13
1.13
0.00
-22.9
-32.5
-55.9
18.3
0.63
3.4
6.1
7.7
0.48
6.4
8.5
0.0
-14.7
2016e
4,500
722
277
261
0.57
0.57
0.00
-15.1
-25.6
-49.8
16.0
0.70
4.4
11.4
15.4
0.46
3.1
4.2
0.0
5.3
2017e
4,250
735
280
262
0.57
0.57
0.30
-5.6
1.7
0.5
17.3
0.70
4.1
10.7
15.3
0.45
3.0
4.1
3.4
5.2
130
120
110
100
90
80
70
60
Mar May
Subsea 7
Mar
Source: Factset
SUMMARY
Recommendation (prev.)
SELL (SELL)
Share price (NOK)
71.4
Target price (previous) (NOK)
50.0 (55.0)
Upside/downside potential (%)
-30
Tickers
SUBC NO, SUBC.OL
CAPITAL STRUCTURE
No. of shares (m)
326.4
No. of shares fully dil. (m)
328.4
Market cap. (NOKm)
23,303
NIBD adj end-2015e (USDm)
471
Enterprise value adj (USDm)
3,316
Net debt/EBITDA adj (x)
0.52
SHARE PRICE PERFORMANCE
Abs. 1/3/12m (%)
-9/-5/-51
Rel. 1/3/12m (%)
-3/-5/-32
High/Low 12m (NOK)
173/68
Free float (%)
86
Source: Company, DNB Markets
UPCOMING EVENTS
Q1 2015
30/04/2015
2016e
0.72
0.57
-20.6
1.04
2017e
0.62
0.57
-7.7
Sales (old)
Sales (new)
Change (%)
Consensus
4,500
4,500
0.0
5,189
4,250
4,250
0.0
5,550
5,300
-4.5
4,902
ANALYSTS
Eirik Ronold Mathisen
eirik.mathisen@dnb.no
+47 24 16 91 91
Sveinung Alvestad
sveinung.alvestad@dnb.no
+47 24 16 91 92
Please see last pages for important information
43
44
DNB Markets
12 March 2015
126
106
NOK95 (33%)
86
NOK71
66
NOK50 (-30%)
46
NOK35 (-51%)
26
Mar 2014
Jul 2014
Nov 2014
Mar 2015
Jul 2015
Nov 2015
Current Share Price
1,220
-124
1,020
-30
-141
820
-88
-20
620
420
220
1,437
970
722
2016
Margin expansion
Revenue growth
2015
Margin expansion
Revenue growth
2014
20
44
45
DNB Markets
12 March 2015
2015e
5,300
New
2016e
4,500
2017e
4,250
2015e
5,550
-4,272
1,278
Old
2016e
4,500
-3,460
1,041
2017e
4,250
-3,266
984
2015e
-250
Change
2016e
0
2017e
0
Operating expenses
EBITDA
EBITDA adj
EBITDA margin (%)
-4,369
931
970
17.6
-3,797
703
722
15.6
-3,545
706
735
16.6
-4,562
988
1,027
17.8
-3,735
765
789
17.0
-3,528
723
752
17.0
194
-57
-57
-0.2
-62
-62
-67
-1.4
-17
-17
-17
-0.4
-430
0
501
-445
0
258
-455
0
251
-430
0
558
-445
0
320
-450
0
273
0
0
-57
0
0
-62
-5
0
-22
Amortisation
Impairment of intangibles
EBIT
EBIT adj
0
0
501
540
0
0
258
277
0
0
251
280
0
558
597
0
320
344
0
0
273
302
0
-57
-57
0
-62
-67
0
0
-22
-22
Associated companies
Net interest
Other financial items
Net financial items
Non-recurring items
PBT
39
-16
0
23
0
524
19
-16
0
3
0
261
29
-18
0
12
0
262
39
-15
24
-15
0
-1
-5
-1
24
-1
-6
581
329
-57
-68
Taxes
Minorities
Discontinued operations
Net profit
Adjustments to net profit
Net profit adj
-155
0
0
369
0
369
-76
0
0
185
0
185
-76
0
0
186
0
186
-171
0
-95
0
410
0
410
1.13
1.13
0.00
0.57
0.57
0.00
0.57
0.57
0.30
-22.9
nm
-55.9
-15.1
-48.7
-49.8
354
-925
-234
471
354
-445
-223
305
Depreciation
Impairment of PPE
EBITA
29
-18
0
11
0
284
0
0
0
0
0
-22
17
0
20
0
233
0
233
-82
0
0
202
0
202
-41
0
-41
-48
0
-48
6
0
0
-15
0
-15
1.26
1.26
0.00
0.72
0.72
0.00
0.62
0.62
0.30
-0.12
-0.12
0.00
-0.15
-0.15
0.00
-0.05
-0.05
0.00
-5.6
0.9
0.5
-19.2
-346.1
-223.9
-18.9
-42.3
-43.1
-5.6
-12.3
-13.6
-3.6
nm
168.0
3.8
-6.3
-6.8
0.0
13.2
14.1
354
-404
-154
147
354
-925
-265
399
354
-545
-223
318
354
-404
-154
150
0
0
32
72
0
100
0
-13
0
0
0
-3
45
46
DNB Markets
12 March 2015
Quarterly numbers
(USDm)
Revenues
Cost of sales
Gross profit
Q3 2013
1,564
-1,179
384
Q4 2013
1,586
-1,264
322
Q1 2014
1,668
-1,341
327
Q2 2014
1,905
-1,413
492
Q3 2014
1,902
-1,414
488
-1,254
310
-1,344
241
-1,421
247
-1,480
425
-1,500
402
-1,101
294
0
1,300
0
1,425
0
1,450
0
1,125
Depreciation
Impairment of PPE
EBITA
-88
0
220
-97
0
109
-97
0
150
-98
0
323
-99
0
300
-107
-1,183
-1,085
-105
0
1,195
-105
0
1,320
-110
0
1,340
-110
0
1,015
Amortisation
Impairment of intangibles
EBIT
0
-3
220
0
-36
109
0
1
150
0
-4
323
0
-3
300
0
-89
-1,085
0
0
1,195
0
0
1,320
0
0
1,340
0
0
1,015
Associated companies
Net interest
Other financial items
Net financial items
Non-recurring items
PBT
49
-12
-38
-1
0
219
1
-9
0
-9
14
114
16
-1
9
23
0
173
27
2
11
40
0
362
24
-2
-34
-12
0
288
2
2
39
43
0
-1,042
-4
-3
0
-7
0
1,188
26
-4
0
22
0
1,342
21
-4
0
17
0
1,357
-4
-5
0
-9
0
1,006
Taxes
Minorities
Discontinued operations
Net profit
Adjustments to net profit
-60
-8
0
152
-42
7
0
79
-36
16
0
153
-98
6
0
270
-83
4
0
210
65
9
0
-968
-32
0
0
1,156
-53
0
0
1,289
-49
0
0
1,307
-20
0
0
987
0.46
0.46
0.00
0.24
0.38
0.60
0.46
0.46
0.00
0.82
0.82
0.00
0.64
0.64
0.00
-2.95
0.66
0.00
0.24
0.24
0.00
0.39
0.39
0.00
0.36
0.36
0.00
0.14
0.14
0.00
-6.9
-10.3
-4.4
1.4
-1.6
-10.2
5.2
13.7
13.5
14.2
13.4
-6.0
-0.2
21.6
38.8
-26.7
-12.0
71.9
-6.8
-22.1
-48.6
9.6
-25.2
-52.3
1.8
-23.8
-43.0
-22.4
-19.3
-77.9
24.6
23.0
-5.6
17.2
10.2
20.3
15.3
-6.1
6.9
4.5
19.6
15.7
-5.8
9.9
8.2
25.8
23.7
-5.1
18.4
13.9
25.7
22.4
-5.2
17.0
10.8
26.9
21.3
-7.7
nm
nm
100.0
99.7
-8.1
91.6
88.9
100.0
101.8
-7.4
94.5
90.4
100.0
101.4
-7.6
93.9
90.2
100.0
99.6
-9.8
89.9
87.7
Operating expenses
EBITDA
46
47
DNB Markets
12 March 2015
Q3 2013
310
0
49
359
Q4 2013
241
0
1
242
Q1 2014
247
0
16
262
Q2 2014
425
0
27
452
Q3 2014
402
0
24
426
EBITA
Gains and losses
Other EBITA adjustments
Impairment of intangibles
EBITA adj
220
0
49
3
269
109
0
1
36
109
150
0
16
-1
166
323
0
27
4
350
300
0
24
3
324
-1,085
0
2
89
-1,082
1,195
0
-4
0
1,191
1,320
0
26
0
1,346
1,340
0
21
0
1,361
1,015
0
-4
0
1,011
EBIT
Gains and losses
Other EBIT adjustments
Impairment of intangibles
EBIT adj
220
0
49
3
269
109
0
1
36
109
150
0
16
-1
166
323
0
27
4
350
300
0
24
3
324
-1,085
0
2
89
-1,082
1,195
0
-4
0
1,191
1,320
0
26
0
1,346
1,340
0
21
0
1,361
1,015
0
-4
0
1,011
Net profit
Gains and losses
Other EBIT adjustments
Impairment of intangibles
152
0
49
3
79
0
1
36
153
0
16
-1
270
0
27
4
210
0
24
3
-968
0
2
89
1,156
0
-4
0
1,289
0
26
0
1,307
0
21
0
987
0
-4
0
Q1 2014
Q2 2014
Q3 2014
666
997
5
863
1,038
4
943
960
-1
614
781
0
550
750
0
700
725
0
750
700
0
500
625
0
EBIT
Northern Hemisphere and Life of Fields
Southern Hemisphere and Global projects
Corporate
24
152
-10
129
194
27
97
212
15
91
116
-106
27
105
-20
76
109
0
67
105
0
4
88
-20
EBIT margin
Northern Hemisphere and Life of Fields
Southern Hemisphere and Global projects
3.6%
15.2%
14.9%
18.7%
10.3%
22.1%
14.8%
14.9%
4.9%
14.0%
10.8%
15.0%
8.9%
15.0%
0.8%
14.0%
1,450
0.87
11,552
1,550
0.81
11,197
134.9
0.07
9,430
199.9
0.14
8,235
800.0
0.62
7,735
1,058
0.74
7,368
1,058
0.73
6,977
1,058
0.94
6,910
Assumptions
Order intake
Book to bill
Order backlog
2,943
1.88
11,800
1,556
0.98
11,770
47
48
DNB Markets
12 March 2015
Annual P&L
(USDm)
Revenues
2008
2,522
2009
2,209
2010
2,369
2011
5,476
2012
6,297
2013
6,297
2014
6,870
2015e
5,300
2016e
4,500
2017e
4,250
-2,012
510
-1,770
439
-1,885
485
-4,577
900
-5,244
1,053
-5,444
854
-5,502
1,368
-4,369
931
-3,797
703
-3,545
706
-110
0
398
-131
0
294
-119
0
361
-338
0
537
-333
0
722
-359
0
446
-401
-1,183
-312
-430
0
501
-445
0
258
-455
0
251
Amortisation
Impairment of intangibles
EBIT
0
-2
398
0
-15
294
0
-4
361
0
-25
537
0
3
722
0
-48
446
0
-95
-312
0
0
501
0
0
258
0
0
251
Associated companies
Net interest
Other financial items
Net financial items
Non-recurring items
PBT
63
-31
62
95
0
492
49
-31
50
68
0
361
75
-29
-8
38
0
399
104
-20
6
90
0
627
86
-29
42
99
248
1,069
127
-49
-40
38
26
511
69
1
24
93
0
-218
39
-16
0
23
0
524
19
-16
0
3
0
261
29
-18
0
12
0
262
-163
33
-6
-23
301
0
301
-103
28
-21
7
245
0
245
-131
33
-48
45
265
0
265
-176
28
-27
0
424
0
424
-222
21
-17
0
830
-245
585
-161
32
-2
0
348
355
703
-152
-70
35
0
-335
0
-335
-155
30
0
0
369
0
369
-76
29
0
0
185
0
185
-76
29
0
0
186
0
186
-38
-40
-42
0
366
-199
380
-199
375
-195
359
0
354
0
354
0
354
0.98
0.98
0.22
0.92
0.92
0.23
0.85
0.85
0.00
1.31
1.30
0.60
2.49
1.75
0.60
1.04
2.11
0.60
-1.04
2.56
0.00
1.13
1.13
0.00
0.57
0.57
0.00
0.57
0.57
0.30
4.8
3.7
-12.4
-6.0
7.3
-8.0
131.2
53.1
15.0
35.1
0.0
20.4
9.1
21.5
-22.9
-55.9
-15.1
-49.8
-5.6
0.5
nm
20.2
22.7
-4.4
15.8
18.3
19.5
12.2
nm
19.9
22.1
-5.9
13.3
15.5
16.4
12.0
nm
20.5
23.6
-5.0
15.3
18.4
16.9
13.2
nm
16.4
18.3
-6.2
9.8
11.7
11.5
8.2
nm
16.7
18.1
-5.3
11.5
12.8
17.0
13.5
nm
13.6
15.6
-5.7
7.1
9.1
8.1
5.6
nm
19.9
20.9
-5.8
nm
nm
nm
nm
nm
17.6
18.3
-8.1
9.5
10.2
9.9
7.0
nm
15.6
16.0
-9.9
5.7
6.2
5.8
4.1
nm
16.6
17.3
-10.7
5.9
6.6
6.2
4.4
Operating expenses
EBITDA
Depreciation
Impairment of PPE
EBITA
Taxes
Effective tax rate (%)
Minorities
Discontinued operations
Net profit
Adjustments to net profit
Net profit adj
Dividend paid
Avg. number of shares
Per share data (USD)
EPS
EPS adj
DPS
Growth and margins (%)
Revenue growth
EPS adj growth
Gross margin
EBITDA margin
EBITDA adj margin
Depreciation/revenues
EBIT margin
EBIT adj margin
PBT margin
Net profit margin
Source: Company, DNB Markets
48
49
DNB Markets
12 March 2015
2008
510
0
63
573
2009
439
0
49
488
2010
485
0
75
559
2011
900
0
104
1,003
2012
1,053
0
86
1,139
2013
854
0
127
981
2014
1,368
0
69
1,437
2015e
931
0
39
970
2016e
703
0
19
722
2017e
706
0
29
735
EBITA
Gains and losses
Other EBITA adjustments
Impairment of intangibles
EBITA adj
398
0
63
2
461
294
0
49
15
343
361
0
75
4
436
537
0
104
25
641
722
0
86
-3
808
446
0
127
48
573
-312
0
69
95
-243
501
0
39
0
540
258
0
19
0
277
251
0
29
0
280
EBIT
Gains and losses
Other EBIT adjustments
Impairment of intangibles
EBIT adj
398
0
63
2
461
294
0
49
15
343
361
0
75
4
436
537
0
104
25
641
722
0
86
-3
808
446
0
127
48
573
-312
0
69
95
-243
501
0
39
0
540
258
0
19
0
277
251
0
29
0
280
Net profit
Gains and losses
Other EBIT adjustments
Impairment of intangibles
Other adjustments
Net profit adj
301
0
63
2
0
301
245
0
49
15
0
245
265
0
75
4
0
265
424
0
104
25
0
424
830
0
86
-3
-245
585
348
0
127
48
355
703
-335
0
69
95
0
-335
369
0
39
0
0
369
185
0
19
0
0
185
186
0
29
0
0
186
0.98
0.00
0.98
0.92
0.00
0.92
0.85
0.00
0.85
1.31
-0.01
1.30
2.49
-0.74
1.75
1.04
1.07
2.11
-1.04
3.60
2.56
1.13
0.00
1.13
0.57
0.00
0.57
0.57
0.00
0.57
49
50
DNB Markets
12 March 2015
Cash flow
(USDm)
Net profit
Depreciation and amortisation
Other non-cash adjustments
Change in net working capital
Cash flow from operations (CFO)
2008
301
110
0
173
609
2009
245
131
0
58
442
2010
265
119
0
-105
240
2011
424
338
-128
-103
579
2012
830
333
-302
-356
515
2013
348
359
-104
330
981
2014
-335
401
-118
268
1,450
2015e
369
430
-23
-349
427
2016e
185
445
-3
-11
616
2017e
186
455
-12
-68
561
Capital expenditure
Acquisitions
Divestments
Cash flow from investing (CFI)
-293
0
0
-293
-172
0
0
-172
-504
0
0
-504
-673
-1
10
-663
-709
-51
345
-415
-739
-1
9
-732
-861
0
1
-860
-925
0
0
-925
-445
0
0
-445
-404
0
0
-404
316
270
-264
-84
100
249
590
-498
171
158
30
-38
0
-317
-326
-4
-40
0
109
65
20
-42
0
-136
-159
9
0
-52
-13
-56
687
-199
-200
97
384
-643
-199
80
-125
-887
-337
-195
-164
29
-667
0
0
0
16
16
0
0
0
11
11
-118
0
0
16
-102
-10
335
-423
-140
485
-638
-77
-482
182
55
316
31
-127
0
0
220
270
31
52
0
0
353
-264
29
23
0
0
-212
-84
20
13
1
-10
-61
100
29
-76
51
-345
-240
249
49
-54
1
-9
235
590
-1
-50
0
-1
538
-498
16
-12
0
0
-494
171
16
-18
0
0
169
158
18
-17
0
0
158
179.8
-19.2
1225.3
-205.4
94.0
-27.5
41.3
-14.7
119.9
60.6
-45.8
-193.3
-198.0
-345.2
-160.1
141.9
-31.6
68.3
64.8
71.4
-11.1
37.4
219.6
786.2
-296.2
90.4
-76.4
148.2
-330.8
198.1
47.9
-17.5
137.1
24.9
128.3
-70.5
-7.6
-184.4
102.4
-191.8
44.2
51.9
134.4
-30.6
134.3
-8.9
9.3
-7.9
-1027.7
-6.5
FCFF calculation
Free cash flow
Less: net interest
Less: tax shields/other
Less: acquisitions
Less: divestments
Free cash flow to the firm
Growth (%)
CFO
CFI
FCF
CFF
FCFF
Source: Company, DNB Markets
50
51
DNB Markets
12 March 2015
Balance sheet
(USDm)
Assets
2008
2,471
2009
2,833
2010
2,990
2011
9,248
2012
10,495
2013
10,357
2014
8,624
2015e
8,467
2016e
8,634
2017e
8,675
Inventories
Trade receivables
Other receivables
Current financial assets
Cash and cash equivalents
Current assets
39
355
234
132
573
1,332
22
298
213
302
908
1,743
24
382
242
271
484
1,403
57
773
898
382
803
2,914
59
1,090
1,012
371
1,288
3,821
44
1,008
979
457
650
3,137
59
840
662
28
573
2,162
34
698
643
28
91
1,493
34
720
598
28
273
1,653
32
765
581
28
328
1,734
908
0
4
140
40
48
1,139
822
0
9
190
19
49
1,090
1,279
0
6
215
23
63
1,586
3,352
2,567
35
264
41
75
6,334
3,748
2,575
24
223
35
68
6,674
4,098
2,585
25
311
48
154
7,221
4,565
1,322
21
374
48
132
6,463
5,060
1,322
21
389
48
132
6,973
5,060
1,322
21
397
48
132
6,981
5,009
1,322
21
409
48
132
6,941
Total assets
2,471
2,833
2,990
9,248
10,495
10,357
8,624
8,467
8,634
8,675
2,471
2,833
2,990
9,248
10,495
10,357
8,624
8,467
8,634
8,675
788
14
1,068
31
1,203
57
5,781
52
6,325
44
6,566
47
5,587
-25
5,956
-32
6,142
-32
6,328
-32
Total equity
801
1,099
1,259
5,833
6,368
6,612
5,562
5,924
6,109
6,295
Trade payables
Other payables and accruals
Short-term debt
Total current liabilities
652
453
10
1,114
624
597
0
1,221
673
517
0
1,191
1,219
1,040
13
2,272
1,452
923
495
2,869
1,637
938
275
2,851
1,674
527
2
2,203
1,260
405
2
1,667
1,215
417
2
1,633
1,190
399
2
1,591
Long-term debt
Deferred tax liabilities
Pension liabilities
Other non-current liabilities
Total non-current liabilities
409
56
21
69
556
416
50
27
20
513
435
44
29
32
540
881
133
29
100
1,143
1,041
112
23
82
1,258
636
170
19
70
895
576
117
21
145
860
592
117
21
145
875
608
117
21
145
891
506
117
21
145
789
Total liabilities
1,670
1,734
1,730
3,415
4,127
3,745
3,063
2,542
2,525
2,380
2,471
2,833
2,990
9,248
10,495
10,357
8,624
8,467
8,634
8,675
-154
889
-492
810
-49
1,372
90
5,815
248
6,498
262
6,543
6
5,305
503
6,150
337
6,161
179
6,178
Key metrics
Net interest bearing debt
Invested capital
Source: Company, DNB Markets
51
52
DNB Markets
12 March 2015
Valuation ratios
(USDm)
Enterprise value
Share price (USD)
Number of shares (m)
Market capitalisation
Net interest bearing debt
Adjustments to NIBD
Net interest bearing debt adj
EV
EV adj
2008
2009
2010
2011
2012
2013
2014
2015e
2016e
2017e
5.57
182.8
1,018
-154
14
-140
865
878
15.87
183.2
2,907
-492
31
-461
2,415
2,446
24.60
183.9
4,525
-49
57
8
4,476
4,533
18.60
338.7
6,300
90
52
142
6,390
6,442
23.74
331.6
7,872
248
44
291
8,119
8,163
19.10
335.4
6,407
262
47
309
6,669
6,715
10.33
326.4
3,371
6
-25
-20
3,377
3,352
8.72
326.4
2,845
503
-32
471
3,348
3,316
8.72
326.4
2,845
337
-32
305
3,182
3,149
8.72
326.4
2,845
179
-32
147
3,024
2,992
Valuation
EPS
EPS adj
DPS
P/E
P/E adj
P/B
Average ROE
Earnings yield adj
Dividend yield
Free cash flow yield
0.98
0.98
0.22
5.7
5.7
1.29
37.2%
26.1%
3.9%
30.6%
0.92
0.92
0.23
17.2
17.2
2.72
25.8%
8.4%
1.4%
9.2%
0.85
0.85
0.00
29.0
29.0
3.76
22.5%
5.2%
0.0%
-5.8%
1.31
1.30
0.60
14.2
14.3
1.09
12.0%
6.5%
3.2%
-1.3%
2.49
1.75
0.60
9.5
13.5
1.24
13.6%
6.7%
2.5%
1.3%
1.04
2.11
0.60
18.3
9.1
0.98
5.4%
10.2%
3.1%
3.9%
-1.04
2.56
0.00
-10.0
4.0
0.60
-5.5%
23.2%
0.0%
17.6%
1.13
1.13
0.00
7.7
7.7
0.48
6.4%
12.5%
0.0%
-17.7%
0.57
0.57
0.00
15.4
15.4
0.46
3.1%
6.5%
0.0%
6.1%
0.57
0.57
0.30
15.3
15.3
0.45
3.0%
6.6%
3.4%
5.6%
EV/SALES
EV/SALES adj
EV/EBITDA
EV/EBITDA adj
EV/EBIT
EV/EBIT adj
EV/capital employed
EV/NOPLAT
0.34
0.35
1.7
1.5
2.2
1.9
0.7
3.8
1.09
1.11
5.5
5.0
8.2
7.1
1.6
7.2
1.89
1.91
9.2
8.1
12.4
10.4
2.8
16.2
1.17
1.18
7.1
6.4
11.9
10.1
1.0
17.2
1.29
1.30
7.7
7.2
11.2
10.1
1.0
16.5
1.06
1.07
7.8
6.8
14.9
11.7
0.9
23.3
0.49
0.49
2.5
2.3
-10.8
-13.8
0.5
4.6
0.63
0.63
3.6
3.4
6.7
6.1
0.5
9.5
0.71
0.70
4.5
4.4
12.3
11.4
0.5
17.6
0.71
0.70
4.3
4.1
12.1
10.7
0.4
17.2
52
53
DNB Markets
12 March 2015
2009
2010
2011
2012
2013
2014
2015e
2016e
2017e
12.3
38.4
9.2
25.5
9.1
27.9
6.9
15.3
8.4
11.0
3.3
7.4
-3.5
-3.5
4.3
8.5
2.2
4.2
2.2
4.1
36.0
-10.9
283.8
42.9
42.9
24.8
24.8
37.2
-15.0
272.9
34.6
34.6
39.5
39.5
54.0
-9.6
172.6
33.1
33.1
25.4
25.4
61.2
-5.1
94.2
23.2
14.9
16.1
10.3
59.5
0.3
96.9
20.1
11.7
13.7
8.0
65.1
-4.6
96.2
11.3
6.8
7.3
4.4
66.4
-8.5
129.5
-7.8
-5.3
18.4
12.3
95.5
-4.4
86.2
11.4
8.8
8.0
6.1
112.4
-4.9
73.0
5.3
4.2
3.7
2.9
117.9
-3.6
68.8
5.2
4.1
3.6
2.8
12.5
31.1
24.1
59.8
208.0
54.7
-3.2
11.6
265.3
22.4
12.2
9.3
20.0
15.2
257.0
36.2
136.6
7.8
131.1
24.9
-11.2
-5.8
10.1
5.3
47.5
20.1
-159.5
21.3
422.0
0.0
-1.5
-1.3
10.6
9.2
86.2
25.5
-33.0
12.3
199.3
45.8
1.6
1.3
8.2
6.5
72.7
18.0
58.3
11.3
212.6
24.1
3.9
3.9
15.6
15.3
132.6
34.4
-183.7
11.7
206.0
57.5
8.6
17.5
21.1
43.0
168.3
65.8
22.9
12.5
214.7
0.0
-9.4
-17.5
8.1
15.0
46.2
25.6
-130.4
17.5
215.1
0.0
3.8
6.0
13.7
21.7
138.5
37.7
98.3
9.9
100.0
0.0
3.7
5.5
13.2
19.7
139.0
35.3
29.7
9.5
88.7
52.6
13.04
13.04
15.11
16.72
-0.30
0.17
0.29
0.29
9.35
9.35
10.91
13.99
-1.12
0.15
0.13
0.13
12.59
12.59
15.20
16.88
-0.10
0.15
0.09
0.09
14.10
13.59
16.22
46.14
0.10
0.10
0.12
0.12
16.47
16.11
18.04
36.29
0.24
0.15
0.16
0.12
6.61
6.29
8.09
17.53
0.31
0.09
0.12
0.09
-15.55
-16.57
-12.90
-2736.40
0.00
0.07
0.15
0.15
23.30
23.05
24.85
56.98
0.54
0.07
0.17
0.17
12.12
11.87
12.75
43.17
0.48
0.07
0.18
0.18
9.76
9.42
10.52
40.14
0.25
0.06
0.15
0.15
85.1
84.4
96.2
111.4
121.9
115.2
79.8
92.3
106.9
115.6
Profitability (%)
ROA
ROCE
53
54
DNB Markets
12 March 2015
SELL
TECHNIP
Elevated expectations
TP: EUR47.0
2011
6,813
884
710
711
4.70
4.80
1.58
12.0
15.4
21.3
13.0
1.06
8.2
10.2
15.1
2.15
14.8
13.1
2.2
6.0
2012
8,204
1,017
822
748
4.91
4.97
1.68
20.4
15.1
3.6
12.4
1.14
9.2
11.4
17.5
2.38
14.0
13.8
1.9
1.3
2013
9,336
1,076
845
761
5.07
5.06
1.85
13.8
5.9
1.8
11.5
0.73
6.4
8.1
13.8
1.87
13.8
13.3
2.6
12.2
2014
10,725
1,108
825
623
3.91
4.38
2.00
14.9
2.9
-13.5
10.3
0.40
3.8
5.1
11.3
1.26
10.2
12.2
4.0
11.3
2015e
11,410
1,286
986
906
5.72
5.72
2.10
6.4
16.1
30.6
11.3
0.47
4.2
5.5
10.4
1.39
13.9
13.8
3.5
0.7
2016e
10,400
1,055
760
687
4.33
4.33
2.21
-8.9
-18.0
-24.2
10.1
0.49
4.8
6.7
13.7
1.32
9.8
10.4
3.7
6.1
2017e
9,300
884
594
533
3.36
3.36
2.32
-10.6
-16.1
-22.5
9.5
0.54
5.7
8.4
17.7
1.26
7.3
8.3
3.9
0.3
85
80
75
70
65
60
55
50
45
Mar May
Technip
Mar
Source: Factset
SUMMARY
Recommendation (prev.)
SELL (SELL)
Share price (EUR)
59.4
Target price (previous) (EUR)
47.0 (47.0)
Upside/downside potential (%)
-21
Tickers
TEC FP, TECF.PA
CAPITAL STRUCTURE
No. of shares (m)
111.8
No. of shares fully dil. (m)
125.0
Market cap. (EURm)
6,633
NIBD adj end-2015e (EURm)
-1,240
Enterprise value adj (EURm)
5,394
Net debt/EBITDA adj (x)
-0.66
SHARE PRICE PERFORMANCE
Abs. 1/3/12m (%)
6/28/-15
Rel. 1/3/12m (%)
5/10/-21
High/Low 12m (EUR)
83/46
Source: Company, DNB Markets
UPCOMING EVENTS
Q1 2015
Q2 2015
23/04/2015
24/07/2015
2016e
4.37
4.33
-0.8
5.39
2017e
3.48
3.36
-3.5
Sales (old)
Sales (new)
Change (%)
Consensus
10,100
10,400
3.0
10,798
9,150
9,300
1.6
11,250
11,410
1.4
11,312
ANALYSTS
Eirik Ronold Mathisen
eirik.mathisen@dnb.no
+47 24 16 91 91
Sveinung Alvestad
sveinung.alvestad@dnb.no
+47 24 16 91 92
Please see last pages for important information
54
55
DNB Markets
12 March 2015
86
76
EUR76 (28%)
66
EUR59
56
EUR47 (-21%)
46
EUR40 (-33%)
36
Mar 2014
Jul 2014
Nov 2014
Mar 2015
Jul 2015
Nov 2015
Current Share Price
-114
71
-118
2016
Other
Margin expansion
1,055
Volume growth
2015
Other
Margin expansion
1,286
Volume growth
1,108
2014
1,350
1,300
1,250
1,200
1,150
1,100
1,050
1,000
950
900
850
55
56
DNB Markets
12 March 2015
New
2016e
10,400
2017e
9,300
2015e
11,250
Old
2016e
10,100
2017e
9,150
2015e
160
Change
2016e
300
2017e
150
-10,124
1,286
1,286
11.3
-9,345
1,055
1,055
10.1
-8,416
884
884
9.5
-9,975
1,275
1,275
11.3
-9,039
1,061
1,061
10.5
-8,246
904
904
9.9
-148
12
12
-0.1
-306
-6
-6
-0.4
-170
-20
-20
-0.4
Depreciation
EBITA
-280
1,006
-275
780
-270
614
-280
995
-275
786
-270
634
0
12
0
-6
0
-20
Amortisation
EBIT
EBIT adj
-20
986
986
-20
760
760
-20
594
594
-20
975
975
-20
766
766
-20
614
614
0
12
12
0
-6
-6
0
-20
-20
Associated companies
Net interest
Other financial items
Net financial items
Non-recurring items
PBT
0
-60
-20
-80
0
906
0
-53
-20
-73
0
687
0
-42
-20
-62
0
533
0
-61
-20
-81
0
-53
-20
-73
0
692
0
-42
-20
-62
0
552
0
1
0
1
0
0
0
0
0
-6
0
0
0
0
0
-19
Taxes
Minorities
Discontinued operations
Net profit
Adjustments to net profit
Net profit adj
-267
0
0
639
0
639
-203
0
0
484
0
484
-157
0
0
375
0
375
-264
0
-163
0
0
389
0
389
-4
0
630
0
630
-204
0
0
488
0
488
9
0
9
2
0
0
-4
0
-4
6
0
0
-14
0
-14
5.72
5.72
2.10
4.33
4.33
2.21
3.36
3.36
2.32
5.64
5.64
2.10
4.37
4.37
2.21
3.48
3.48
2.32
0.08
0.08
0.00
-0.04
-0.04
0.00
-0.12
-0.12
0.00
6.4
19.6
30.6
-8.9
-23.0
-24.2
-10.6
-21.8
-22.5
4.9
18.2
28.9
-10.2
-21.4
-22.5
-9.4
-19.8
-20.3
1.5
1.4
1.8
1.4
-1.5
-1.7
-1.2
-2.0
-2.2
-325
-2,432
-1,240
-269
-2,239
-1,557
-431
-2,071
-1,623
-325
-2,420
-1,220
-269
-2,196
-1,510
-431
-2,049
-1,611
0
-11
-20
0
-43
-47
0
-21
-12
(EURm)
Revenues
Operating expenses
EBITDA
EBITDA adj
EBITDA margin (%)
Capex
Working capital
NIBD adj
894
12
56
57
DNB Markets
12 March 2015
2017e
2015e
5,350
5,900
4,600
5,500
0
4,200
4,950
0
495
185
-85
811
252
-88
573
278
-85
12.1%
4.9%
11.2%
3.8%
15.2%
4.3%
1,085
289
-88
822
318
-85
745
225
-85
EBITDA margin
Subsea
EPC
20.1%
4.8%
17.5%
5.6%
Assumptions
Order intake
Order backlog
Book to bill
Order intake Subsea
Order intake EPC
Order backlog Subsea
Order backlog EPC
7,300
16,826
0.64
3,300
4,000
7,618
9,208
9,300
15,726
0.89
3,300
6,000
6,218
9,508
(EURm)
Revenues
Subsea
EPC
Corporate
EBIT
Subsea
EPC
Corporate
EBIT margin
Subsea
EPC
EBITDA
Subsea
EPC
Corporate
2015e
New
2016e
2017e
2015e
Change
2016e
2017e
5,410
6,000
0
4,700
5,700
0
4,400
4,900
0
60
100
100
200
0
200
-50
0
825
249
-88
567
278
-85
463
236
-85
14
-3
0
-6
0
0
32
-52
0
15.3%
4.2%
12.5%
5.0%
11.0%
4.8%
0.1%
-0.1%
-0.4%
-0.2%
0.2%
-1.0%
1,071
292
-88
828
318
-85
713
276
-85
14
-3
0
-6
0
0
32
-52
0
16.9%
4.6%
20.0%
4.9%
18.0%
5.8%
17.0%
5.6%
0.0%
-0.1%
-0.5%
-0.2%
0.0%
-1.0%
7,750
14,176
0.83
4,250
3,500
6,068
8,108
7,250
16,936
0.64
3,250
4,000
7,628
9,308
6,800
13,636
0.67
3,300
3,500
6,328
7,308
9,500
13,986
1.04
4,500
5,000
6,628
7,358
50.00
-110.0
0.00
50.00
0.00
-10.00
-100.0
2,500
2,090
0.22
0.00
2,500
-110.0
2,200
-1,750
190.0
-0.20
-250.0
-1,500
-560.0
750.0
57
58
DNB Markets
12 March 2015
Quarterly numbers
(EURm)
Revenues
Q3 2013
2,412
Q4 2013
2,485
Q1 2014
2,469
Q2 2014
2,615
Q3 2014
2,825
-2,127
285
-2,213
272
-2,288
181
-2,312
303
-2,520
305
-2,497
319
-2,515
285
-2,585
345
-2,530
350
-2,493
307
Depreciation
EBITA
-60
225
-62
210
-56
125
-58
245
-59
247
-91
228
-65
220
-65
280
-70
280
-80
227
Amortisation
EBIT
-3
222
-3
207
-5
120
-5
240
-5
242
-5
223
-5
215
-5
275
-5
275
-5
222
Associated companies
Net interest
Other financial items
Net financial items
Non-recurring items
PBT
1
-10
-19
-29
0
193
0
-10
-26
-36
0
172
3
-12
-14
-24
0
96
0
-13
-5
-18
-7
216
0
-14
-5
-19
-34
189
0
-14
-54
-68
-33
122
0
-15
-5
-20
0
195
0
-15
-5
-20
0
254
0
-15
-5
-20
0
255
0
-15
-5
-20
0
202
Taxes
Minorities
Discontinued operations
Net profit
Adjustments to net profit
Net profit adj
-42
-2
0
150
0
150
-33
-4
0
135
0
135
-26
-2
0
67
0
67
-59
1
0
158
5
162
-55
-2
0
132
24
155
-39
-3
0
80
23
104
-58
0
0
137
0
137
-75
0
0
179
0
179
-75
0
0
179
0
179
-60
0
0
143
0
143
1.35
1.35
1.21
1.21
0.60
0.60
1.41
1.45
1.18
1.39
0.72
0.93
1.23
1.23
1.60
1.60
1.61
1.61
1.28
1.28
-0.5
15.6
0.6
3.0
8.0
-9.9
-0.7
22.5
-42.5
6.0
7.9
-0.8
8.0
17.1
2.8
-0.3
13.3
-23.3
-0.6
13.4
104.0
4.6
12.0
10.4
-1.7
2.0
15.5
-2.8
-0.6
37.7
Gross margin
EBITDA adj margin
Depreciation/revenues
EBIT adj margin
Net profit margin
nm
11.8
-2.5
9.2
6.3
nm
10.9
-2.5
8.3
5.6
nm
7.3
-2.3
4.8
2.8
nm
11.6
-2.2
9.2
6.0
nm
10.8
-2.1
8.5
4.7
nm
11.3
-3.2
7.9
2.9
nm
10.2
-2.3
7.7
4.9
nm
11.8
-2.2
9.4
6.1
nm
12.1
-2.4
9.5
6.2
nm
11.0
-2.9
7.9
5.1
Operating expenses
EBITDA
58
59
DNB Markets
12 March 2015
Q3 2013
285
0
285
Q4 2013
272
0
272
Q1 2014
181
0
181
Q2 2014
303
0
303
Q3 2014
305
0
305
EBITA
Other EBITA adjustments
EBITA adj
225
0
225
210
0
210
125
0
125
245
0
245
247
0
247
228
0
228
220
0
220
280
0
280
280
0
280
227
0
227
EBIT
Other EBIT adjustments
EBIT adj
222
0
222
207
0
207
120
0
120
240
0
240
242
0
242
223
0
223
215
0
215
275
0
275
275
0
275
222
0
222
Net profit
Other EBIT adjustments
Tax adjustments
Other adjustments
Net profit adj
150
0
0
0
150
135
0
0
0
135
67
0
0
0
67
158
0
-2
7
162
132
0
-10
34
155
80
0
-10
33
104
137
0
0
0
137
179
0
0
0
179
179
0
0
0
179
143
0
0
0
143
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
1,094
1,318
0
963
1,522
0
1,009
1,459
0
1,233
1,383
0
1,348
1,476
0
1,290
1,526
0
1,300
1,500
0
1,430
1,500
0
1,380
1,500
0
1,300
1,500
0
161
87
-26
130
102
-25
55
86
-21
189
73
-22
193
70
-21
198
48
-23
186
51
-22
246
51
-22
223
74
-22
171
74
-22
14.7%
6.6%
13.5%
6.7%
5.5%
5.9%
15.3%
5.3%
14.3%
4.7%
15.3%
3.1%
14.3%
3.4%
17.2%
3.4%
16.2%
4.9%
13.1%
4.9%
214
97
-26
183
113
-25
107
95
-21
243
82
-22
247
80
-21
286
56
-23
246
61
-22
306
61
-22
288
84
-22
246
84
-22
EBITDA margin
Subsea
EPC
19.5%
7.4%
19.0%
7.4%
10.6%
6.5%
19.7%
5.9%
18.3%
5.4%
22.1%
3.7%
18.9%
4.1%
21.4%
4.1%
20.9%
5.6%
18.9%
5.6%
Assumptions
Order intake
Order backlog
Book to bill
Order intake Subsea
Order intake EPC
Order backlog Subsea
Order backlog EPC
Utilization
3,142
15,851
1.30
1,757
1,386
7,982
7,869
0.75
3,188
16,581
1.28
1,596
1,591
8,642
7,939
0.69
2,780
15,357
1.13
2,057
723.4
8,406
6,951
0.69
7,077
19,860
2.71
2,238
4,839
9,519
10,341
0.88
2,211
19,306
0.78
1,272
939.0
9,462
9,844
0.86
3,227
20,936
1.15
1,271
1,956
9,728
11,208
0.74
1,825
20,336
0.00
1,200
1,000
9,628
10,708
0.00
1,825
19,106
0.00
700.0
1,000
8,898
10,208
0.00
1,825
17,926
0.00
700.0
1,000
8,218
9,708
0.00
1,825
16,826
0.00
700.0
1,000
7,618
9,208
0.00
EBIT
Subsea
EPC
Corporate
EBIT margin
Subsea
EPC
EBITDA
Subsea
EPC
Corporate
59
60
DNB Markets
12 March 2015
Annual P&L
(EURm)
Revenues
2008
7,481
2009
6,456
2010
6,082
2011
6,813
2012
8,204
2013
9,336
2014
10,725
2015e
11,410
2016e
10,400
2017e
9,300
-6,667
814
-5,564
892
-5,316
766
-5,930
884
-7,187
1,017
-8,260
1,076
-9,617
1,108
-10,124
1,286
-9,345
1,055
-8,416
884
Depreciation
EBITA
-147
667
-196
696
-133
633
-162
721
-184
833
-215
861
-263
845
-280
1,006
-275
780
-270
614
Amortisation
EBIT
-10
657
-20
677
-13
620
-12
710
-11
822
-17
845
-20
825
-20
986
-20
760
-20
594
Associated companies
Net interest
Other financial items
Net financial items
Non-recurring items
PBT
2
-10
-1
-9
0
648
5
-10
-51
-56
-248
373
0
6
-26
-20
-6
595
0
-13
30
17
-16
711
1
-40
-25
-64
-10
748
1
-40
-44
-83
0
761
3
-53
-78
-129
-74
623
0
-60
-20
-80
0
906
0
-53
-20
-73
0
687
0
-42
-20
-62
0
533
Taxes
Effective tax rate (%)
Minorities
Discontinued operations
Net profit
Adjustments to net profit
Net profit adj
-194
30
-6
0
448
0
448
-195
52
-8
0
170
173
344
-179
30
2
0
418
4
422
-209
29
5
0
507
11
518
-205
27
-3
0
540
7
546
-191
25
-7
0
563
0
563
-180
29
-6
0
437
52
488
-267
30
0
0
639
0
639
-203
30
0
0
484
0
484
-157
30
0
0
375
0
375
Dividend paid
-125
-128
-144
-156
-173
-186
-207
-223
-224
-169
4.28
4.28
1.20
1.60
3.23
1.35
3.92
3.96
1.45
4.70
4.80
1.58
4.91
4.97
1.68
5.07
5.06
1.85
3.91
4.38
2.00
5.72
5.72
2.10
4.33
4.33
2.21
3.36
3.36
2.32
-5.1
47.4
-13.7
-24.4
-5.8
22.4
12.0
21.3
20.4
3.6
13.8
1.8
14.9
-13.5
6.4
30.6
-8.9
-24.2
-10.6
-22.5
Gross margin
EBITDA margin
EBITDA adj margin
Depreciation/revenues
EBIT margin
EBIT adj margin
PBT margin
Net profit margin
nm
10.9
10.9
-2.0
8.8
8.8
8.7
6.1
nm
13.8
13.8
-3.0
10.5
10.5
5.8
2.8
nm
12.6
12.6
-2.2
10.2
10.2
9.8
6.8
nm
13.0
13.0
-2.4
10.4
10.4
10.4
7.4
nm
12.4
12.4
-2.2
10.0
10.0
9.1
6.6
nm
11.5
11.5
-2.3
9.0
9.0
8.2
6.1
nm
10.3
10.3
-2.5
7.7
7.7
5.8
4.1
nm
11.3
11.3
-2.5
8.6
8.6
7.9
5.6
nm
10.1
10.1
-2.6
7.3
7.3
6.6
4.7
nm
9.5
9.5
-2.9
6.4
6.4
5.7
4.0
Operating expenses
EBITDA
60
61
DNB Markets
12 March 2015
2008
814
0
0
814
2009
892
0
0
892
2010
766
0
0
766
2011
884
0
0
884
2012
1,017
0
0
1,017
2013
1,076
0
0
1,076
2014
1,108
0
0
1,108
2015e
1,286
0
0
1,286
2016e
1,055
0
0
1,055
2017e
884
0
0
884
EBITA
Gains and losses
Other EBITA adjustments
EBITA adj
667
0
0
667
696
0
0
696
633
0
0
633
721
0
0
721
833
0
0
833
861
0
0
861
845
0
0
845
1,006
0
0
1,006
780
0
0
780
614
0
0
614
EBIT
Gains and losses
Other EBIT adjustments
EBIT adj
657
0
0
657
677
0
0
677
620
0
0
620
710
0
0
710
822
0
0
822
845
0
0
845
825
0
0
825
986
0
0
986
760
0
0
760
594
0
0
594
Net profit
Gains and losses
Other EBIT adjustments
Tax adjustments
Other adjustments
Net profit adj
448
0
0
0
0
448
170
0
0
-74
248
344
418
0
0
-2
6
422
507
0
0
-5
16
518
540
0
0
-3
10
546
563
0
0
0
0
563
437
0
0
-22
74
488
639
0
0
0
0
639
484
0
0
0
0
484
375
0
0
0
0
375
4.28
0.00
4.28
1.60
1.63
3.23
3.92
0.04
3.96
4.70
0.10
4.80
4.91
0.06
4.97
5.07
-0.01
5.06
3.91
0.47
4.38
5.72
0.00
5.72
4.33
0.00
4.33
3.36
0.00
3.36
61
62
DNB Markets
12 March 2015
Cash flow
(EURm)
Net profit
Depreciation and amortisation
Other non-cash adjustments
Change in net working capital
Cash flow from operations (CFO)
2008
448
157
39
-227
455
2009
170
215
-30
262
634
2010
418
146
-22
-501
38
2011
507
174
106
-131
652
2012
540
195
146
-439
445
2013
563
232
94
421
1,319
2014
437
283
43
105
868
2015e
639
300
5
-645
299
2016e
484
295
-11
-193
576
2017e
375
290
-45
-169
452
Capital expenditure
Acquisitions
Divestments
Cash flow from investing (CFI)
-401
-15
5
-411
-424
-8
3
-429
-389
-141
22
-508
-357
-604
4
-958
-519
-248
44
-723
-623
-8
79
-552
-376
-96
86
-385
-325
5
0
-320
-269
-36
0
-306
-431
-128
0
-559
43
205
-470
-306
-279
767
482
-21
271
-106
79
-125
1
6
-40
84
-128
0
90
47
894
-144
-2
171
919
133
-156
0
32
9
-40
-173
-108
80
-241
525
-186
-40
-150
149
80
-207
-45
222
51
-129
-223
0
0
-352
-264
-224
0
0
-487
-513
-169
0
0
-682
252
449
-297
-519
916
533
-373
-217
-789
43
10
75
15
-5
138
205
10
-306
8
-3
-86
-470
-6
-47
141
-22
-403
-306
13
125
604
-4
432
-279
40
154
248
-44
119
767
40
115
8
-79
850
482
53
-49
96
-86
496
-21
60
9
-5
0
43
271
53
-9
36
0
351
-106
42
-47
128
0
16
-44.9
-135.8
-93.3
93.8
-72.1
39.5
-4.3
372.4
215.9
-162.2
-94.0
-18.3
-329.0
1871.9
-369.4
1601.3
-88.6
34.8
-99.0
207.2
-31.8
24.5
9.0
-2745.1
-72.4
196.5
23.7
375.1
162.1
612.6
-34.2
30.2
-37.1
-66.2
-41.6
-65.5
16.9
-104.3
-797.6
-91.3
92.6
4.5
1400.2
-38.3
709.2
-21.5
-82.8
-139.4
-40.0
-95.4
FCFF calculation
Free cash flow
Less: net interest
Less: tax shields/other
Less: acquisitions
Less: divestments
Free cash flow to the firm
Growth (%)
CFO
CFI
FCF
CFF
FCFF
Source: Company, DNB Markets
62
63
DNB Markets
12 March 2015
Balance sheet
(EURm)
Assets
2008
8,132
2009
8,570
2010
10,222
2011
11,771
2012
11,581
2013
13,024
2014
14,600
2015e
14,154
2016e
13,823
2017e
13,048
Inventories
Trade receivables
Other receivables
Current financial assets
Cash and cash equivalents
Current assets
226
1,124
748
40
2,405
4,543
215
1,061
666
62
2,656
4,660
222
1,277
1,107
41
3,106
5,751
255
1,264
1,427
36
2,809
5,789
297
1,274
1,344
54
2,289
5,258
275
1,738
1,445
123
3,205
6,787
451
1,505
2,026
76
3,738
7,795
448
1,405
2,010
76
3,365
7,304
416
1,352
1,943
76
3,149
6,935
372
1,209
1,830
76
2,360
5,847
945
2,409
7
201
27
3,589
1,195
2,408
9
264
34
3,910
1,472
2,435
0
325
240
4,471
2,194
3,174
0
319
295
5,981
2,413
3,368
6
301
236
6,323
2,346
3,333
118
260
180
6,237
2,693
3,353
158
391
210
6,805
2,708
3,363
178
391
210
6,850
2,678
3,367
241
391
210
6,888
2,817
3,369
414
391
210
7,201
Total assets
8,132
8,570
10,222
11,771
11,581
13,024
14,600
14,154
13,823
13,048
8,132
8,570
10,222
11,771
11,581
13,024
14,600
14,154
13,823
13,048
2,473
22
2,687
30
3,180
22
3,652
22
4,001
13
4,157
17
4,363
12
4,779
12
5,040
12
5,246
12
Total equity
2,496
2,717
3,202
3,673
4,014
4,174
4,375
4,791
5,051
5,257
Trade payables
Other payables and accruals
Short-term debt
Total current liabilities
1,704
2,926
26
4,656
1,476
3,279
28
4,783
1,862
3,130
681
5,673
2,244
3,330
598
6,172
2,095
2,938
400
5,433
2,477
3,490
160
6,126
2,703
4,427
256
7,386
2,576
3,791
127
6,494
2,288
3,734
127
6,150
2,046
3,508
127
5,682
Long-term debt
Deferred tax liabilities
Pension liabilities
Other non-current liabilities
Total non-current liabilities
734
101
41
104
980
845
97
28
100
1,070
1,092
93
51
110
1,347
1,553
138
93
140
1,925
1,706
189
76
162
2,133
2,214
179
69
262
2,724
2,357
202
47
233
2,839
2,387
202
47
233
2,869
2,140
202
47
233
2,622
1,627
202
47
233
2,109
Total liabilities
5,636
5,853
7,020
8,097
7,567
8,849
10,225
9,363
8,772
7,791
8,132
8,570
10,222
11,771
11,581
13,024
14,600
14,154
13,823
13,048
-1,645
1,631
-1,784
1,661
-1,332
2,381
-657
3,801
-183
5,114
-832
4,800
-1,125
4,881
-851
5,721
-881
5,837
-605
6,091
Key metrics
Net interest bearing debt
Invested capital
Source: Company, DNB Markets
63
64
DNB Markets
12 March 2015
Valuation ratios
(EURm)
Enterprise value
Share price (EUR)
Number of shares (m)
Market capitalisation
Net interest bearing debt
Adjustments to NIBD
Net interest bearing debt adj
EV
EV adj
2008
2009
2010
2011
2012
2013
2014
2015e
2016e
2017e
21.81
104.8
2,286
-1,645
16
-1,629
641
657
49.40
106.3
5,249
-1,784
21
-1,763
3,466
3,487
69.10
106.5
7,357
-1,332
22
-1,310
6,025
6,047
72.62
107.9
7,839
-657
22
-635
7,182
7,204
86.84
109.9
9,542
-183
7
-176
9,359
9,366
69.86
111.3
7,775
-832
-101
-932
6,943
6,843
49.42
111.6
5,516
-1,125
-146
-1,271
4,391
4,245
59.36
111.8
6,633
-851
-389
-1,240
5,783
5,394
59.36
111.8
6,633
-881
-676
-1,557
5,752
5,076
59.36
111.8
6,633
-605
-1,018
-1,623
6,028
5,010
Valuation
EPS
EPS adj
DPS
P/E
P/E adj
P/B
Average ROE
Dividend yield
Free cash flow yield
4.28
4.28
1.20
5.1
5.1
0.92
19.1%
5.5%
1.9%
1.60
3.23
1.35
30.8
15.3
1.95
6.5%
2.7%
3.9%
3.92
3.96
1.45
17.6
17.5
2.31
14.1%
2.1%
-6.4%
4.70
4.80
1.58
15.5
15.1
2.15
14.8%
2.2%
-3.9%
4.91
4.97
1.68
17.7
17.5
2.38
14.0%
1.9%
-2.9%
5.07
5.06
1.85
13.8
13.8
1.87
13.8%
2.6%
9.8%
3.91
4.38
2.00
12.6
11.3
1.26
10.2%
4.0%
8.7%
5.72
5.72
2.10
10.4
10.4
1.39
13.9%
3.5%
-0.3%
4.33
4.33
2.21
13.7
13.7
1.32
9.8%
3.7%
4.1%
3.36
3.36
2.32
17.7
17.7
1.26
7.3%
3.9%
-1.6%
EV/SALES
EV/SALES adj
EV/EBITDA
EV/EBITDA adj
EV/EBIT
EV/EBIT adj
EV/capital employed
EV/NOPLAT
0.09
0.09
0.8
0.8
1.0
1.0
0.2
1.4
0.54
0.54
3.9
3.9
5.1
5.2
1.0
7.3
0.99
0.99
7.9
7.9
9.7
9.7
1.2
13.9
1.05
1.06
8.1
8.2
10.1
10.2
1.2
14.5
1.14
1.14
9.2
9.2
11.4
11.4
1.5
16.3
0.74
0.73
6.5
6.4
8.2
8.1
1.0
11.7
0.41
0.40
4.0
3.8
5.3
5.1
0.6
7.6
0.51
0.47
4.5
4.2
5.9
5.5
0.7
8.3
0.55
0.49
5.5
4.8
7.6
6.7
0.7
10.7
0.65
0.54
6.8
5.7
10.1
8.4
0.7
14.4
64
65
DNB Markets
12 March 2015
2009
2010
2011
2012
2013
2014
2015e
2016e
2017e
5.5
21.4
2.0
19.8
4.4
14.5
4.6
13.1
4.6
13.8
4.6
13.3
3.2
12.2
4.4
13.8
3.5
10.4
2.8
8.3
12.6
-33.3
458.8
45.3
31.2
18.5
-42.6
388.6
42.3
28.8
24.2
-38.6
255.4
31.3
21.5
32.2
-38.1
179.2
23.3
16.1
29.4
-25.3
160.4
18.7
12.9
25.1
-25.6
194.5
17.4
11.9
25.1
-28.7
219.7
17.4
12.0
23.7
-21.3
199.5
19.0
13.1
25.8
-21.5
178.2
13.5
9.3
30.3
-22.3
152.7
10.3
7.0
0.6
1.9
6.1
19.9
113.3
9.8
0.7
5.4
272.6
28.1
3.2
3.9
9.8
12.1
149.7
13.3
147.7
6.6
216.5
84.2
-7.7
-6.4
0.6
0.5
9.8
0.7
107.6
6.4
292.4
37.0
-4.5
-3.9
9.6
8.3
182.4
10.6
-58.5
5.2
220.4
33.6
-3.4
-2.9
5.4
4.7
85.7
8.2
-96.2
6.3
282.3
34.2
8.2
9.9
14.1
17.0
211.7
21.5
162.7
6.7
289.5
36.5
4.5
8.7
8.1
15.7
231.0
11.7
122.1
3.5
142.7
51.2
-0.2
-0.3
2.6
4.5
92.1
4.6
-58.4
2.8
116.1
36.7
2.6
4.1
5.5
8.7
214.1
9.4
-44.7
2.6
97.9
50.9
-1.1
-1.6
4.9
6.8
104.9
8.0
-210.1
4.6
159.6
68.9
17.63
16.89
17.15
80.61
-2.02
0.09
0.25
0.24
15.82
15.04
15.47
89.20
-2.00
0.10
0.14
0.14
12.58
11.47
11.70
-127.65
-1.74
0.17
0.19
0.13
10.26
9.43
9.59
68.49
-0.74
0.18
0.22
0.17
9.30
8.72
8.84
25.42
-0.18
0.18
0.18
0.15
9.76
9.20
9.38
26.84
-0.77
0.18
0.23
0.22
9.32
8.90
9.12
20.80
-1.02
0.18
0.32
0.30
10.21
9.80
10.00
21.39
-0.66
0.18
0.27
0.26
8.69
8.27
8.49
19.98
-0.84
0.16
0.25
0.24
8.38
7.94
8.20
21.14
-0.68
0.13
0.21
0.20
91.3
97.6
143.0
144.1
116.5
124.4
120.1
109.2
115.6
119.3
Profitability (%)
ROA
ROCE
65
66
DNB Markets
12 March 2015
Important Information
This report has been prepared by DNB Markets, a division of DNB Bank ASA. DNB Bank ASA is a part of the
DNB Group. This report is based on information obtained from public sources that DNB Markets believes to be
reliable but which DNB Markets has not independently verified, and DNB Markets makes no guarantee,
representation or warranty as to its accuracy or completeness. Any opinions expressed herein reflect DNB
Markets judgement at the time the report was prepared and are subject to change without notice.
The return-requirement bands above may be applied with some degree of flexibility depending on the liquidity and volatility characteristics of the individual share.
High risk
Medium risk
Low risk
Investing in any security is subject to substantial risk. Return on investment may vary greatly.
Careful consideration for possible financial distress should be accounted for before investing in any security.
Sell
54
29%
10%
No rec
1
1%
1%
Total
187
67
Conflict of interest, risk classification and price target history for Subsea 7
DNB Markets/DNB Group may receive compensation for investment banking services or other products/services from Subsea 7.
Analyst*
0
Employees**
124
DNB***
0
Update
12.03.2015
*The analyst or any close associates. **Share positions does not include administration and section FX/Treasury.
***Share positions as part of DNB Group. Holdings as part of DNB Markets investment services activity are not included.
Price, Rating, and Price Target History Subsea 7 (SUBC NO) as of 11-3-15
1-8-14
B : 120
2-5-14
H : 120
16-9-14
H : 100.0
11-11-14
H : 94.0
13-11-14
S : 73.0
25-11-14
S : 67.0
17-12-14
S : 63.0
29-1-15
S : 56.0
5-3-15
S : 55.0
120
110
100
90
80
70
60
50
29-6-14
29-7-14
29-8-14
28-9-14
29-10-14
28-11-14
29-12-14
28-1-15
28-2-15
30-3-15
Analyst*
0
Employees**
0
DNB***
0
Update
12.03.2015
*The analyst or any close associates. **Share positions does not include administration and section FX/Treasury.
***Share positions as part of DNB Group. Holdings as part of DNB Markets investment services activity are not included.
66
67
DNB Markets
12 March 2015
Price, Rating, and Price Target History Saipem (SPM IM) as of 11-3-15
30-7-14
H : 17.6
3-7-14
H : 19.0
13-8-14
H : 17.8
27-10-14
S : 14.0
29-10-14
S : 12.5
25-11-14
S : 10.00
17-12-14
S : 8.00
17-2-15
S : 7.60
22
20
18
16
14
12
10
8
6
29-6-14
29-7-14
29-8-14
28-9-14
29-10-14
28-11-14
29-12-14
28-1-15
28-2-15
30-3-15
Analyst*
0
Employees**
0
DNB***
0
Update
12.03.2015
*The analyst or any close associates. **Share positions does not include administration and section FX/Treasury.
***Share positions as part of DNB Group. Holdings as part of DNB Markets investment services activity are not included.
Price, Rating, and Price Target History Technip (TEC FP) as of 11-3-15
24-7-14
H : 71.0
3-7-14
S : 71.0
13-8-14
S : 62.0
27-10-14
H : 60.0
24-11-14
S : 52.0
17-12-14
S : 44.0
19-2-15
S : 47.0
85
80
75
70
65
60
55
50
45
40
29-6-14
29-7-14
29-8-14
28-9-14
29-10-14
28-11-14
29-12-14
28-1-15
28-2-15
30-3-15
Analyst*
0
Employees**
0
DNB***
0
Update
12.03.2015
*The analyst or any close associates. **Share positions does not include administration and section FX/Treasury.
***Share positions as part of DNB Group. Holdings as part of DNB Markets investment services activity are not included.
Price, Rating, and Price Target History Aker Solutions (AKSO NO) as of 11-3-15
S : 54.0
5-11-14
S : 40.0
25-11-14
S : 36.0
17-12-14
S : 31.0
2-2-15
S : 30.0
16-2-15
S : 32.0
70
65
60
55
50
45
40
35
30
25
29-8-14
28-9-14
29-10-14
28-11-14
29-12-14
28-1-15
28-2-15
30-3-15
67
68
DNB Markets
12 March 2015
There is not enough historical volatility data to rate the risk of this share.
Legal statement
The analyst hereby certifies that (i) the views expressed in this report accurately reflect that research analysts personal views about the company and the securities that
are the subject of this report, and (ii) no part of the research analysts compensation was, is, or will be, directly or indirectly, related to the specific recommendations or
views expressed by that research analyst in this report. DNB Markets employees, including research analysts, may receive compensation that is generated by overall firm
profitability. Confidentiality rules and internal rules restricting the exchange of information between different parts of DNB Markets/DNB Bank ASA or the DNB Group are in
place to prevent employees of DNB Markets who are preparing this report from utilizing or being aware of information available in the DNB Group that may be relevant to
the recipients decisions. DNB Markets and the DNB Group have incorporated internal rules and regulations in order to avoid any potential conflicts of interest. This report is
for clients only, and not for publication, and has been prepared for information purposes only by DNB Markets - a division of DNB Bank ASA registered in Norway number
NO 984 851 006 (the Register of Business Enterprises) under supervision of the Financial Supervisory Authority of Norway (Finanstilsynet), the Monetary Authority of
Singapore, and on a limited basis by the Financial Conduct Authority and the Prudential Regulation Authority of the UK, and the Financial Supervisory Authority of Sweden.
Details about the extent of our regulation by local authorities outside Norway are available from us on request.
It is issued subject to the General Business Terms for DNB Markets and information about the terms is available at www.dnb.no. For requests regarding the
General Business Terms of the Singapore Branch of DNB Bank ASA, please contact +65 6212 0753. Information about the DNB Group can be found at www.dnb.com.
DNB Markets is a member of The Norwegian Securities Dealers Association, which has issued recommendations and market standards for securities companies.
The Association's Internet address where the recommendations and market standards can be found is: www.nfmf.no. This report is not an offer to buy or sell any security or
other financial instrument or to participate in any investment strategy. No liability whatsoever is accepted for any direct or indirect (including consequential) loss or
expense arising from the use of this report. Distribution of research reports is in certain jurisdictions restricted by law. Persons in possession of this report should seek
further guidance regarding such restrictions before distributing this report. Please contact DNB Markets at 08940 (+47 915 08940) for further information and inquiries
regarding this report, such as ownership positions and publicly available/commonly known corporate advisory performed by DNB Markets etc, in relation to the
Norwegian Securities Trading Act 2007/06/29 no. 75 and the Norwegian Securities Trading Regulation 2007/06/29 no. 876.
Additional information for clients in Singapore
The report has been distributed by the Singapore Branch of DNB Bank ASA. It is intended for general circulation and does not take into account the specific investment
objectives, financial situation or particular needs of any particular person. You should seek advice from a financial adviser regarding the suitability of any product referred
to in the report, taking into account your specific financial objectives, financial situation or particular needs before making a commitment to purchase any such product.
You have received a copy of the report because you have been classified either as an accredited investor, an expert investor or as an institutional investor, as these terms
have been defined under Singapore's Financial Advisers Act (Cap. 110) ("FAA") and/or the Financial Advisers Regulations ("FAR"). The Singapore Branch of DNB Bank
ASA is a financial adviser exempt from licensing under the FAA but is otherwise subject to the legal requirements of the FAA and of the FAR. By virtue of your status as an
accredited investor or as an expert investor, the Singapore Branch of DNB Bank ASA is, in respect of certain of its dealings with you or services rendered to you, exempt
from having to comply with certain regulatory requirements of the FAA and FAR, including without limitation, sections 25, 27 and 36 of the FAA. Section 25 of the FAA
requires a financial adviser to disclose material information concerning designated investment products which are recommended by the financial adviser to you as the
client. Section 27 of the FAA requires a financial adviser to have a reasonable basis for making investment recommendations to you as the client. Section 36 of the FAA
requires a financial adviser to include, within any circular or written communications in which he makes recommendations concerning securities, a statement of the nature
of any interest which the financial adviser (and any person connected or associated with the financial adviser) might have in the securities. Please contact the Singapore
branch of DNB Bank ASA at +65 6212 0753 in respect of any matters arising from, or in connection with, the report. The report is intended for and is to be circulated only
to persons who are classified as an accredited investor, an expert investor or an institutional investor. If you are not an accredited investor, an expert investor or an
institutional investor, please contact the Singapore Branch of DNB Bank ASA at +65 6212 0753. We, the DNB group, our associates, officers and/or employees may have
interests in any products referred to in the report by acting in various roles including as distributor, holder of principal positions, adviser or lender. We, the DNB group, our
associates, officers and/or employees may receive fees, brokerage or commissions for acting in those capacities. In addition, we, the DNB group, our associates, officers
and/or employees may buy or sell products as principal or agent and may effect transactions which are not consistent with the information set out in the report.
In the United States
Each research analyst named on the front page of this research report, or at the beginning of any subsection hereof, hereby certifies that (i) the views expressed in this
report accurately reflect that research analysts personal views about the company and the securities that are the subject of this report; and (ii) no part of the research
analysts compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in this report. The
research analyst(s) named on this report are not registered / qualified as research analysts with FINRA. The research analyst(s) may not be associated persons of DNB
Markets, Inc. and therefore may not be subject to NASD Rule 2711 restrictions on communications with a subject company, public appearances and trading securities held
by a research analyst. This report is being furnished upon request and is primarily intended for distribution to Major U.S. Institutional Investors within the meaning of Rule
15a-6 under the U.S. Securities Exchange Act of 1934. To the extent that this report is being furnished, or will be disseminated, to non-Major U.S. Institutional Investors,
such distribution is being made by DNB Markets, Inc., a separately incorporated subsidiary of DNB that is a U.S. broker-dealer and a member of the
Financial Industry Regulatory Authority and the Securities Investor Protection Corporation. Any U.S. recipient of this report seeking to obtain additional information
or to effect any transaction in any security discussed herein or any related instrument or investment should call or write DNB Markets, Inc., 200
Park Avenue, New York, NY 10166-0396, telephone number +1 212-551-9800.
In Canada
The Report has been distributed in reliance on the International Dealer Exemption pursuant to NI 31-103 subsection 8.18(2) and subsection 8.18(4)(b). Please be advised
that: 1. DNB Bank ASA (DNB Markets) and DNB Markets, Inc. are not registered as a dealer in the local jurisdiction to make the trade. We provide our services in Canada
as an exempt international dealer. 2. The jurisdiction of DNB Bank ASA (DNB Markets) and DNB Markets, Inc.'s head office is Norway. 3. There may be difficulty enforcing
legal rights against DNB Bank ASA (DNB Markets) and DNB Markets, Inc. because all or substantially all of their assets may be situated outside of Canada. 4. The name
and address of the agent for service of process for DNB Bank ASA (DNB Markets) and DNB Markets, Inc. in the local jurisdiction is:
Alberta: Blake, Cassels & Graydon LLP, 855 - 2nd Street S.W., Suite 3500, Bankers Hall East Tower, Calgary, AB T2P 4J8. British Columbia: Blakes Vancouver
Services Inc., 595 Burrard Street, P.O. Box 49314, Suite 2600, Three Bentall Centre, Vancouver, BC V7X 1L3. Manitoba: Aikins, MacAulay & Thorvaldson LLP,
30th Floor, Commodity Exchange Tower, 360 Main Street, Winnipeg, MB R3C 4G1. New Brunswick: Stewart McKelvey, Suite 1000, Brunswick House, 44
Chipman Hill, PO Box 7289, Station A, Saint John, NB E2L 2A9. Newfoundland and Labrador: Stewart McKelvey, Suite 1100, Cabot Place, 100 New Gower Street,
P.O. Box 5038, St. John's, NL A1C 5V3. Nova Scotia: Stewart McKelvey, Purdy's Wharf Tower One, 1959 Upper Water Street, Suite 900, P.O. Box 997, Halifax,
NS B3J 2X2. Northwest Territories: Gerald Stang, Suite 201, 5120-49 Street, Yellowknife, NT X1A 1P8. Nunavut: Field LLP, P.O. Box 1779, Building 1088C,
Iqaluit, NU X0A 0H0. Ontario: Blakes Extra-Provincial Services Inc., Suite 4000, 199 Bay Street, Toronto, ON M5L 1A9. Prince Edward Island: Stewart McKelvey,
65 Grafton Street, Charlottetown, PE C1A 1K8. Qubec: Services Blakes Qubec Inc., 600 de Maisonneuve Boulevard Ouest, Suite 2200, Tour KPMG, Montral,
QC H3A 3J2.
Saskatchewan: MacPherson, Leslie & Tyerman LLP, 1500 Continental Bank Building, 1874 Scarth Street, Regina, SK S4P 4E9. Yukon: Grant
Macdonald, Macdonald & Company, Suite 200, Financial Plaza, 204 Lambert Street, Whitehorse, YK Y1A 3T2.
In Brazil
The analyst or any close associates do not hold nor do they have any direct/indirect involvement in the acquisition, sale, or intermediation of the securities discussed herein.
Any financial interests, not disclosed above, that the analyst or any close associates holds in the issuer discussed in the report is limited to investment funds that do not
mainly invest in the issuer or industry discussed in the report and the management of which these persons cannot influence.
68
69
Oil Services
Company Update
Norway
2 February 2015
Subsea 7
Sell
65.90
53.00
67.00
Sell
Normal
Reuters
Bloomberg
2015 orders expected in line with 2014, but new revenue bookings to drop
Consensus EPS estimates for Subsea 7 have fallen by 6% (2015) and 10% (2016)
this year already and we see Q4 triggering further downside as Subsea 7
announces updated backlog scheduling for 2016 alone (first reported in the 2013
annual report but not updated since). Consensus still shows EBITDA margins of
18.5% in 2015/16 a marginal contraction versus the 19.4% we forecast for 2014.
We simply do not believe this is factoring in any risk of deteriorating vessel utisation
which has to be aligned with sharp revenue contraction in 2015 and beyond.
SUBC.OL
SUBC NO
24,333
3,114
2,782
300
4%
0.2
369.2
173.2
90%
SUBC.OL
Relative Norway
Relative sector
-3M
(11)
(10)
18
-12M
(41)
(45)
0
Financials (USD)
Year end: Dec
Revenues (m)
Operating profit (m)
Pre-tax profit (m)
EPS (reported)
EPS (adjusted)
DPS
130
120
110
100
90
80
70
60
Feb
Apr
Jun
Aug
Oct
Dec Feb
Analysts
Andrew Dobbing
(47) 2100 8567
andrew.dobbing@seb.no
Terje Fatnes
(47) 2100 8538
terje.fatnes@seb.no
Harald yen
(47) 2100 8542
harald.oyen@seb.no
2012
6,297
808
1,069
2.23
2.23
0.60
2013
6,297
573
511
0.99
0.99
0.60
2014E
7,270
1,076
1,049
2.20
2.20
0.00
2015E
5,165
348
329
0.64
0.64
0.00
2016E
4,914
313
291
0.57
0.57
0.60
15.0
26.2
84.0
0.0
(29.1)
(55.6)
15.4
87.6
121.4
(29.0)
(67.7)
(70.8)
(4.9)
(9.9)
(11.2)
12.8
14.0
11.2
9.1
5.8
7.7
14.8
11.8
14.0
6.7
3.1
4.4
6.4
2.6
3.8
PER (x)
Free cash flow yield (%)
Dividend yield (%)
P/BV (x)
10.6
(0.4)
2.5
1.26
19.2
4.0
3.2
0.97
3.8
5.2
0.0
0.39
13.2
(13.4)
0.0
0.38
14.8
5.1
7.1
0.37
EV/Sales (x)
EV/EBITDA (x)
EV/EBIT (x)
Operating cash flow/EV (%)
EV/Capital employed (x)
1.55
8.5
12.0
8.9
1.23
1.17
7.5
12.9
13.9
0.98
0.47
2.3
3.2
35.1
0.51
0.70
4.6
10.5
17.6
0.43
0.70
4.4
11.0
19.2
0.40
Source for all data on this page: SEB (estimates) and SIX/Thomson Reuters (prices)
researchonline.sebgroup.com
70
Company Update
Subsea 7
Investment thesis
We see a wave of negative triggers for Subsea 7, including risks of continued weak asset
utilisation, which we do not believe the market is sufficiently aware of. This is particularly
true in the North Sea, historically a more important market for Subsea than for either
Technip or particularly Saipem. We argue this highlights the risk surrounding consensus
revenue forecasts and particularly margin forecasts. We expect a major impairment of
Subsea 7s goodwill (USD 2,578m at 30 September 2014, which arose as a consequence
of the merger between Subsea 7 and Acergy which completed on 7 January 2011). We
acknowledge that there is a very illiquid market for Subsea 7s highly specialised vessels.
However, we believe the tangible book value will ultimately provide some downside
protection to the share price at a time when earnings continue to contract and near term
earnings multiples no longer provide a realistic valuation metric. Whats more, as M&A
remains an important theme in this sector, asset based valuation metrics could prove
particularly appropriate.
Still trading well above prior low on price/book value
Subsea 7 is trading on a consensus price/book value per share of 0.39x (0.41x on our
forecasts) a record low and compared with the previous low of 0.59x in November 2008.
However adjusting for the goodwill, Subsea 7 is trading on a price/tangible book value of
0.63x. We expect the current down-cycle to be much deeper than that in 2008/09, and it is
now more appropriate to question the market value of assets. As such the discount we
apply, both in absolute terms, and relative to the low at the end of 2008 seems appropriate.
Price/equity book value
6
0
Jan-07
Jan-08
Jan-09
Jan-10
SUBC
Jan-11
SPM
Jan-12
Jan-13
Jan-14
Jan-15
TEC
2015 orders expected in line with 2014, but new revenue bookings to drop
The consensus (Bloomberg) revenue forecast for 2015 (USD 5,900m, down from
USD 7,097m in 2014) seems aligned with (i) lower bookings for this year (USD 3,866m at
the end of Q3 2014 is down USD 854m from the USD 4,720m booked for 2014 at the end
of Q3 2013), and (ii) assumptions of weak order intake. However while an unusually high
proportion of order intake in 2014 was from small contracts and scope changes (both of
which tend to offer early execution and hence a short-dated backlog), a return to a more
typical contribution from larger announced contracts will likely mean reduced new 2015
revenue bookings.
02 February 2015
71
Company Update
Subsea 7
Earning revisions
We have revised our revenue forecasts for Subsea 7 on the back of lower order intake
assumptions for 2015 (down from USD 4.5bn to USD 4.0bn) and 2016 (down from
USD 6.5bn to USD 6.0bn). We have also lowered our margin forecasts based on (i) the
historical correlation between profitability and utilisation, and (ii) our analysis of the current
and likely evolution of Subsea 7s fixed and variable cost base. The effect on our estimates
is:
2015 revenues cut by 18%. We have reduced our 2015 revenue forecast from
USD 6,309m to USD 5,165m (-18%), 12% below consensus of USD 5,900m.
2016 revenue cut by 8%. We have reduced our 2016 revenue forecast from
USD 5,359m to USD 4,914m (-8%), 11% below consensus of USD 5,501m.
2015 EBITDA cut by 37%. We have reduced our 2015 EBITDA forecast from
USD 1,263m to USD 793m (-37%), 27% below consensus of USD 1,089m.
2016 EBITDA cut by 28%. We have reduced our 2016 EBITDA forecast from
USD 1,089m to USD 779m (-28%), 23% below consensus of USD 1,013m.
Earnings revision
(USD)
Revenues (m)
Old
New
Change (%)
Operating profit (m)
Old
New
Change (%)
Pre-tax profit (m)
Old
New
Change (%)
EPS (reported)
Old
New
Change (%)
EPS (adjusted)
Old
New
Change (%)
2014E
2015E
2016E
7,270
7,270
0
6,309
5,165
(18)
5,359
4,914
(8)
1,076
1,076
0
817
348
(57)
623
313
(50)
1,049
1,049
0
801
329
(59)
608
291
(52)
2.20
2.20
0
1.59
0.64
(60)
1.21
0.57
(53)
2.20
2.20
0
1.59
0.64
(60)
1.21
0.57
(53)
Source: SEB
02 February 2015
72
Company Update
Subsea 7
Q4 2014 preview
We forecast Q4 2014 revenues of USD 1,795m, down 6% sequentially from USD 1,902m
in Q3 2014, up 13% y-o-y from USD 1,586m in Q4 2013 and 10% above consensus
(Bloomberg) of USD 1,635m. We forecast EBITDA of USD 347m (19.3% margin, and
which does not include any additional provision reversal on Guara-Lula), down 10%
sequentially from USD 386m (20.3% margin, excluding the USD 40m provision reversal on
Guara-Lula), up 19% y-o-y from USD 291m (18.3% margin, excluding the USD 49m
provision on Guara-Lula), and 20% above consensus of USD 289m (17.7% margin). We
forecast order intake of USD 600m in Q4 2014, based on USD 195m of announced orders,
and USD 405m of non-announced orders. Three contracts were announced during Q4: (i)
Baobab Field Phase III development for CNR in Ivory Coast (USD 70m, but this was
included in the Q3 2014 order backlog), (ii) a SURF contract for Shell in the GoM
(USD 75m), and (iii) the Stampede project for Hess in the GoM (USD 120m). We estimate
a year-end 2014 order backlog of USD 8,235m, although this does not include any
currency impact. In its Q3 report Subsea 7 reported a USD 300m negative currency impact
on its backlog, based on the weakening of most relevant currencies against the USD. We
note that during Q4 the USD/NOK dropped by 15% compared with a 5% drop during Q3
2014. As such we see risk of another significant impact on Subsea 7s backlog and revenue
visibility for 2015 and 2016.
We expect there to be focus on bookings for 2016. In its Q3 2014 presentation Subsea 7
announced that 42% its USD 9,430m backlog was for execution in 2016 and beyond. In its
Q4 presentation, Subsea7 will disclose the backlog for execution in 2016 alone. We
estimate this will be USD 1,834m based on an estimated USD 2,126m of the backlog for
execution in 2017 and beyond (which we assume is entirely attributable to the long term
PLSV contracts). However, as we highlight above, this USD 1,834m could be negatively
impacted by foreign currency movements during Q4 2014, and hence this disclosure could
be another negative trigger for 2016 earnings revisions.
Overview of backlog scheduling Subsea 7
Backlog +7% YoY
USD 3,231m
of end Q2/13
backlog for
execution in
2015 and
beyond
USD 4,064m
of end Q2/13
backlog for
execution in
2014
USD 3,126m
of end Q2/13
backlog for
execution in
H2 2013
2,126
773
3,231
4,064
2,458
(2015)
Apparent
improvement
In revenue
visibility
4,032
1,906
(2016)
3,808
3,360
3,126
Backlog at
Q2 2013
Backlog at
Q2 2014
USD 4,032m
of end Q2/14
backlog for
execution in
2016 and
beyond
USD 3,808m
of end Q2/14
backlog for
execution in
2015
USD 3,360m
of end Q2/14
backlog for
execution in
H2 2014
3,961
USD 3,961m
of end Q3/14
backlog for
execution in
2016 and
beyond
3,866
USD 3,866m
of end Q3/14
backlog for
execution in
2015
1,603
USD 1,603m
of end Q3/14
backlog for
execution in
Q4 2014
2,126
1,834
(2016)
Backlog at
Q3 2014
02 February 2015
73
Company Update
Subsea 7
USD m
6,000
5,000
4,000
3,000
2,000
1,000
0
2008
2009
2010
2011
2012
2013
2014E
2015E
2016E
Unannounced
30
20
10
0
-10
Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14
Additions to current year revenue/quartely EX PLSV order intake
Annual average
02 February 2015
74
Company Update
Subsea 7
USD m
2,000
1,500
1,000
500
0
Q4/14E
Q3/14
Q2/14
Q1/14
Q4/13
Q3/13
Q2/13
Q1/13
Q4/12
Q3/12
Q2/12
Q1/12
Q4/11
Q3/11
Q2/11
Q1/11
-500
Overview of PLSV adjustments order intake, order backlog and revenue scheduling
Q1/13
Q2/13
Q3/13
Q4/13
Q1/14
Q2/14
Q3/14
283
2,500
2,660
1,170
396
1,160
710
1,175
275
Order intake
Announced orders
883
670
368
Non-announced orders
2,450
350
2,603
600
1,530
493
Order intake
1,450
956
1,553
438
Non-PLSV orders
PLSV orders
-30% YoY
9,539
10,222
9,455
10,421
8,424
7,887
7,765
7,510
5,873
3,376
3.883
3,787
3,687
3,557
11,800
11,770
11,552
11,197
9,430
Order backlog
Non-PLSV backlog
PLSV backlog
-1,044
-1,043
3,493
3,872
4,357
2,036
554
554
4,064
Revenue booked
(backlog execution)
3,313
554
554
3,578
3,253
2,450
4,720
-854
2,589
3,004
Non-PLSV revenue
3,807
3,866
PLSV revenue
02 February 2015
75
Company Update
Subsea 7
USD m
6,000
5,000
4,000
3,000
2,000
1,000
0
2008
North Sea & Canada
2009
Africa & GoM
2010
2011
2012
Brazil
2013
2014 YTD
Total non-announced
Source: Subsea 7
02 February 2015
76
Company Update
Subsea 7
60
50
40
30
20
10
19 Jan
21 Jan
23 Jan
25 Jan
27 Jan
29 Jan
31 Jan
21 Jan
23 Jan
25 Jan
27 Jan
29 Jan
31 Jan
17 Jan
17 Jan
19 Jan
15 Jan
15 Jan
13 Jan
11 Jan
09 Jan
07 Jan
05 Jan
03 Jan
01 Jan
100
80
60
40
20
13 Jan
11 Jan
09 Jan
07 Jan
05 Jan
03 Jan
01 Jan
Construction vessels
Construction/Horizontal Flex-lay vessels
Diving vessels
02 February 2015
77
Company Update
Subsea 7
90
Q3/12
Q3/13
Q1/12
85
Q3/11
80
Q4/11
Q2/13
Q4/12
Q4/13
Q1/14
75
Q2/12
Q2/11
y = 1.9318x + 48.883
R = 0.422
Q1/13
70
65
Q1/11
60
13
14
15
16
17
18
19
20
21
22
We see risk of weak utilisation in Q1, and while it should improve in Q2 and Q3 as normal,
the combination of relatively weak current bookings and a weak outlook for new orders
means we expect the average level in 2015 to remain low. Assuming much of the 28%
revenue decline we forecast in 2015 translates into a reduction in overall vessel utilisation,
we could easily see the 85% average we estimate for FY 2014 (87% implied for 9M 2014
from the 79%, 91% and 91% disclosed for Q1, Q2 and Q3 2014) dropping below 70% this
year. Assuming a fleet utilisation of 70% (a historical low for Subsea 7) implies a gross
margin of 10.9% (compared to the 11.0% we forecast) and an operating margin of 3.5%
(compared to the 6.7% we forecast). Note that the margin analysis we carry out later in this
section, based on the split between fixed and operating costs, indicates an operating
margin of 4.4% in 2015 and 5.0% in 2016.
Correlation between fleet utilisation and group operating margin
95
Q3/14
90
Q2/14
Q3/12
Q4/11
Q2/12
Q3/13
Q1/12
85
Q3/11
Q4/12
y = 1.2942x + 65.422
R = 0.4377
80
Q2/13
Q4/13
Q1/14
75
Q2/11
Q1/13
70
65
Q1/11
60
6
10
12
14
16
18
20
22
02 February 2015
78
Company Update
Subsea 7
Correlation between North Sea & Canada (NSC) fleet utilisation & NCS operating margin
100
Q3/12
95
Q4/13
90
Q3/14
Q2/14
Q3/13
Q4/11
Q4/12
Q2/12
85
Q3/11
Q1/12
80
Q2/13
Q2/11
75
70
y = 1.4431x + 64.945
R = 0.3964
65
Q1/14
Q1/13
60
55
Q1/11
50
-5
10
NCS operating margin (%)
15
20
25
Stage 1: the correlation between quarterly order intake and next year backlog
execution to calculate 2015 revenue coverage by the end of 2014.
Stage 2: the correlation between quarterly order intake and current year backlog
execution to calculate 2015 revenue coverage by the end of 2015.
02 February 2015
10
79
Company Update
Subsea 7
Stage 1: the correlation between quarterly order intake and increase to year+2
backlog execution to calculate 2016 revenue coverage by the end of 2014.
Stage 2: the correlation between quarterly order intake and next year backlog
execution to calculate 2016 revenue coverage by the end of 2015.
Stage 3: the correlation between quarterly order intake and current year backlog
execution to calculate 2016 revenue coverage by the end of 2016.
USD 3,961m
of end Q3
backlog for
execution in
2016+
2,126
(2017+)
3,961
1,834
(2016)
2016 revenue
calculation
USD 4,911m
(actual forecast
USD 4,914m)
2,673
USD 3,866m
of end Q3
backlog for
execution in
2015
1,649
1,327
499
101
USD 1,603m
of end Q3
backlog for
execution in
Q4 2014
1,649
1,327
3,866
1,603
Period
Order intake (USD m)
USD 4,911 of
2016 revenue
101
1,935
1,834
YE/14
1,834
YE/15
YE/16
4,000
6,000
02 February 2015
11
80
Company Update
Subsea 7
Correlation between quarterly order intake and increase to year+2 backlog execution
1,000
900
Q3/11
800
Q2/11
Q1/13
700
Q3/12
600
500
400
Q2/12
300
Q3/13
Q2/12
Q1/12
Q1/14
Q4/12
200
100
Q2/13
Q4/14
y = 0.1689x
R = 0.0626
Q3/14
-100
-200
Q4/13
-300
Q4/11
-400
-500
0
500
1,000
1,500
2,000
2,500
3,000
3,500
1,000
Q1/13
Q2/11
Q4/11
900
Q4/12
Q2/14
800
y = 0.3317x
R = 0.438
700
Q3/13
600
500
Q2/13
Q2/12
400
Q1-Q4 2015
Q1/14
Q3/11Q1/12
Q1/11
300
200
Q3/12
100
Q3/14
0
0
500
1,000
1,500
2,000
2,500
3,000
3,500
02 February 2015
12
81
Company Update
Subsea 7
900
Q2/13
Q1/14
Q3/12
800
700
Q1/13
Q2/11
600
500
Q1-Q4 2016
y = 0.2748x
R = 0.1968
Q2/12
400
Q2/12
300
200
Q3/11
Q3/14
Q3/13
100
Q4/11
Q4/12
0
Q4/13
-100
-200
0
500
1,000
1,500
2,000
2,500
3,000
02 February 2015
13
82
Company Update
Subsea 7
Margin analysis
Margin sensitivity to revenue forecasts based on fixed/variable cost split
2014E
Base
2015E
2016E
4,914
-5
-260
7,270
Revenue
Revenue growth (%)
Administration expenses
7,270
-314
5,165
-29
-270
-5,553
30
-1,666
23
-3,887
53
86
1,489
20.5
-4,148
32
-1,327
26
-2,821
55
46
793
15.4
Depreciation
Impairment
Operating profit
Operating profit margin (%)
-400
-13
1,076
14.8
Revenue
Administration costs (fixed)
Depreciation and amortisation (fixed)
Other fixed costs
Variable costs
Operating profit before associates and jv
Share of results of associates and jv
Operating profit
Administration costs (fixed, %)
Depreciation and amortisation (fixed, %)
Other fixed costs (%)
Total fixed costs (%)
Variable costs (%)
4,914
-5
-290
7,270
-314
5,165
-29
-300
-314
6,000
-17
-300
4,400
-27
-290
-3,922
36
-1,412
29
-2,510
51
46
779
15.8
-5,553
30
-1,666
23
-3,887
53
86
1,489
20.5
-4,236
37
-1,550
30
-2,686
52
46
675
13.1
-3,957
38
-1,500
31
-2,457
50
46
713
14.5
-5,553
30
-1,666
23
-3,887
53
86
1,489
20.5
-4,670
33
-1,550
26
-3,120
52
46
1,076
17.9
-3,650
40
-1,450
33
-2,200
50
46
506
11.5
-430
-16
348
6.7
-450
-16
313
6.4
-400
-13
1,076
14.8
-430
-16
230
4.4
-450
-16
248
5.0
-400
-13
1,076
14.8
-430
-16
631
10.5
-450
-16
41
0.9
7,270
-314
-414
-1,666
-3,887
990
86
1,076
5,165
-270
-446
-1,327
-2,821
302
46
348
4,914
-260
-466
-1,412
-2,510
267
46
313
7,270
-314
-414
-1,666
-3,887
990
86
1,076
5,165
-300
-446
-1,550
-2,686
184
46
230
4,914
-290
-466
-1,500
-2,457
202
46
248
7,270
-314
-414
-1,666
-3,887
990
86
1,076
6,000
-300
-446
-1,550
-3,120
585
46
631
4,400
-290
-466
-1,450
-2,200
-6
46
41
5
7
27
38
62
6
9
27
42
58
6
10
30
46
54
5
7
27
38
62
6
9
31
46
54
6
10
32
48
52
5
7
27
38
62
6
8
29
42
58
7
11
33
50
50
Investment strategy
2015 Backlog contraction, earnings cuts and weak share price outlook
The chart below shows the correlation between the change in the group backlog during a
year, and the change to the following years consensus EPS estimate. In addition, the area
of the circle indicates the absolute total share price return (where blue indicates a share
increase, and green indicates a share decrease). We have six main conclusions:
Earnings revisions are a more important share price driver for Subsea 7 than backlog
growth (although both are important).
Subsea 7 has shown a positive share return every year (2004, 2005, 2006 and 2010)
that the following years EPS estimate has been revised up and the backlog has
expanded.
Subsea 7 has shown a negative share price return in each year (2008 and 2014) that
the following years EPS estimate has been revised down and the backlog has
contracted we believe this scenario is likely in 2015.
There has been no instance where the backlog has contracted and the following years
consensus EPS estimate has been revised up.
However, there have been five years (2007, 2009, 2011, 2012 and 2013) when the
backlog has expanded and the following years consensus EPS estimate has been
revised down. In three of these years (2007, 2009, 2012) the share price return was
positive (in 2009 helped by a strong oil price recovery); in two of the years (2011,
2013) the share price return was negative.
02 February 2015
14
83
Company Update
Subsea 7
Subsea 7s share price in 2009 was driven by an unusually strong re-rating the 12month forward PER increased from 5x at the beginning of the year to 22x by the yearend, largely on the back of a strong oil price, and a broader market recovery post the
financial crisis. While we cannot rule out some multiple recovery this year, we see
much of this being eroded by continued consensus earnings downgrades.
2004
+60
+40
2011
2013
2007
+20
2009
2012
-60
-40
y = 0.5467x + 17.232
R = 0.5386
2010
2005
2006
+0
-20
+0
+20
+40
+60
+80
-20
2008
2014
-40
-60
Next year consensus EPS revisions (%)
Source: SEB, Subsea 7; * note circle size indicates total share return (where blue is a positive return and green a negative return).
64
47
42
-8
-45
-38
20
-10
-16
-9
-36
21
45
49
16
-18
-23
0
-4
-11
-20
-31
Yes
Yes
No
No
No
No
Yes
No
No
Yes
No
ACY
USD m
1,026
1,788
2,194
2,587
3,175
2,511
2,848
3,552
SUB
USD m
468
1,242
1,355
3,748
4,215
3,268
2,798
2,800
Backlog
ACY+SUB SUBC Growth Growth
USD m USD m
(%)
1,494 1,026
3,030 1,788
+74
Yes
3,549 2,194
+23
Yes
6,335 2,587
+18
Yes
7,390 3,175
+23
Yes
5,779 2,511
-21
No
5,646 2,848
+13
Yes
6,352 3,552
+25
Yes
8,538
+34
Yes
9,086
+6
Yes
11,770
+30
Yes
8,235
-30
No
O/P
No
Yes
Yes
No
No
No
Yes
Yes
No
Yes
No
No
02 February 2015
15
84
Company Update
Subsea 7
Contract overview
Major project progression at end Q3/14
Aasta Hansteen (Norway)
TEN (Ghana)
SLMP (Norway)
Mariner (UK)
Montrose (UK)
Erha North (Nigeria)
Heidelberg (GOM)
Lianzi Topside (Angola)
Western Isles (UK)
Martin Linge (Norway)
Lianzi Surf (Angola)
Gorgon HLTI (Australia)
Ofon 2 (Nigeria)
Enochdhu (UK)
Clair Ridge (UK)
Guar Lula NE (Brazil)
Knarr (Norway)
Eldfisk (Norway)
0
10
20
30
40
50
%
60
70
80
90
100
30
40
50
%
60
70
80
90
100
Source: Subsea 7
10
20
Source: Subsea 7
02 February 2015
16
85
Company Update
Subsea 7
Valuation
Subsea 7 trades on a 12-month consensus PER of 6.4x compared with an average of
13.6x during 2012 and 12.6x during 2013, 8.6x during 2014 and a current average 9.8x for
the sector.
12-month forward consensus EPS and PER - Subsea 7
26
2.5
24
22
2.0
20
18
1.5
14
1.0
12
USD
PER (x)
16
10
0.5
8
6
0.0
4
2
0
-0.5
Sep 02 Sep 03 Sep 04 Sep 05 Sep 06 Sep 07 Sep 08 Sep 09 Sep 10 Sep 11 Sep 12 Sep 13 Sep 14
12m fwd EPS (RHA)
Sector PER
350
300
2.0
250
1.5
NOK
200
150
1.0
100
0.5
50
0.0
0
Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14
2005
2006
2007
2008
2009
2010
2012
2013
2014
2015
2016
Share price
2011
We note a strong correlation (R-squared of 0.67) for Subsea 7 between the average
consensus PER during a year and the revision to next years consensus EPS during the
same year. Based on this correlation, the current PER of 6.3x implies a downgrade of
some 74% to consensus 2016E EPS, significantly more than the 10% YTD. Thus it now
looks like much of the negative revisions to consensus forecasts are discounted. However
we still expect downgrades to trigger share price downside, as it is hard to argue for any
significant re-rating while there are few prospects of any positive triggers for this stock.
02 February 2015
17
86
Company Update
Subsea 7
50
2005
2006
y = 9.3532x - 134.21
R = 0.665
30
2010
10
2007
2013
2014 YTD
-10
2011
2012
-30
2014
2009
2008
-50
5
11
13
15
17
Average 12-month forward PER (x)
Data point
Current PER
19
21
23
The rating for Subsea in 2009 was heavily driven by a recovery in earnings revisions
2009 earnings were downgraded by 45% during 2008 and downgraded by only 1% during
2009. An end to the downgrade trend was enough to trigger a re-rating at that time, and the
re-rating correctly appeared to be discounting the upgrades that followed (2010 consensus
EPS was upgraded by 61% during 2010). This rapid reversal in the direction of earnings
revisions was helped by the pace of oil price recovery in 2009. While we forecast a
USD 60/bl average Brent oil price next year, we continue to see demand for subsea work
being negatively impacted by capital constraints amongst international oil companies the
primary client group for Subsea 7. A return to more sustained growth in the subsea
segment will ultimately coincide with a return to investment growth for IOCs, a trend which
we anticipate, but at present there are few signs of this occurring before 2017 at the
earliest.
02 February 2015
18
87
Company Update
Subsea 7
Summary of Subsea 7 contract awards and the phasing of project revenue (USDm)
Contract
Country
Paz Flor
Angola
Cascade/Chinook
US
Deep Panuke
Canada
Pluto
Australia
4-yr frame agreement
Denmark
Gjoa/Morvin
Norway
GSNC (Sul Capixaba)
Brazil
5-yr IRM contract
UK
Block 31 (PSVM)
Angola
IRM
UK
Grove/Alpha
UK
Troll B
Norway
Droshky
US
Skarv (ACY)
Norway
ALNG
Angola
Total 2008
Acergy order intake (2008)
Subsea order intake (2008)
Total actual order intake (2008)
Client
Total
Petrobras
Encana
Woodside
Dong
StatoilHydro
Petrobras
Total
BP
Venture
Centrica
StatoilHydro
Marathon
BP
Angola LNG
Contract
Country
Client
Norway
Brazil
Holland
Nigeria
Norway
Australia
Angola
Brazil
Ghana
Angola
UK
Brazil
Angola
Australia
Nigeria
Brazil
US
UK
UK
StatoilHydro
Petrobras
Total
Mobil
BP
BHP Billiton
BP
Petrobras
Tullow
BP
Maersk
Petrobras
Total
Santos
Chevron
Petrobras
Anadarko
CNR
DSVi
Date
announced
Jan-08
Jan-08
Feb-08
Feb-08
Mar-08
Mar-08
Mar-08
Apr-08
Jul-08
Jul-08
Jul-08
Aug-08
Aug-08
Aug-08
Dec-08
Installation
start
mid-10
Q4 2009
Q2 2010
H2 2009
2008
2009
2009
2008
NA
H2 2008
H2 2009
2009
Q3 2009
H2 2010
Q4 2009
Vessels
employed
Polaris/Queen
NA
Falcon/Discovery
Toisa Proteus
NA
NA
NA
NA
Seas
NA
Navica
NA
Oceans
Acergy
Hawk/Leg/Pol
Date
announced
Mar-09
Mar-09
Apr-09
May-09
Jul-09
Jul-09
Jul-09
Jul-09
Aug-09
Aug-09
Aug-09
Sep-09
Sep-09
Sep-09
Oct-09
Oct-09
Nov-09
Dec-09
Dec-09
Installation
start
2009
2010
Q3 2010
NA
Q3 2010
H2 2009
2010
Q1 2010
Q2 2010
2010
Q4 2009
Q3 2009
Q2 2010
Q4 2009
Q4 2010
Q3 2010
Q3 2009
Q4 2009
2010
Vessels
employed
NA
NA
NA
Orion
NA
Toisa Proteus
NA
Queen
NA
NA
Seven Pelican
Normand Seven
Pol/Hawk/Leg
Navica
NA
NA
NA
Rockwater 1
NA
02 February 2015
19
88
Company Update
Subsea 7
Summary of Subsea 7 contract awards and the phasing of project revenue (USDm)
Contract
Country
Client
BP
NA
Petrobras
Apache
BP
Petrobras
Total
Various
Total
BP
Dana Petroleum
ConocoPhillips
Statoil
Petrobras
Hess
Contract
Country
Client
Misc diving
Tambau
B11 Platform
5-yr frame agreement
Tahiti Phase 2
Ensign
Eldfisk
Huntingdon
Guara/Lula
Ekofisk
Tordis
Ormen Lange (Mid North)
G1 Field
Skuld (Fossekall-Dompap)
3 yr LOF
Triton
Siri Caisson
Gorgon umbilicals
Gorgon
Tue backs at Jette field
OFON 2 sealines
Deepwater flexlay vessel
Atla
UOTE Campos Basin
West Franklin
Brazil
Brazil
Brazil
Norway
US
UK
Norway
UK
Brazil
Norway
Norway
Norway
India
Norway
US
UK
Denmark
Australia
Australia
Norway
Nigeria
Brazil
Norway
Brazil
UK
Petrobras
Petrobras
ConocoPhillips
Statoil
Chevron
Centrica
ConocoPhillips
E.ON
Petrobras
ConocoPhillips
Statoil
Shell
ONGC
Statoil
BP
Dana Petroleum
DONG
Chevron
Chevron
DNO
Total
Petrobras
Total
Petrobras
ELF
6,797
3,170
Date
announced
Apr-10
May-10
May-10
Jun-10
Jun-10
Jul-10
Jul-10
Aug-10
Oct-10
Nov-10
Nov-10
Nov-10
Nov-10
Dec-10
Dec-10
Installation
start
Q4 2010
Q1 2011
NA
Q1 2011
Q1 2011
Q3 2010
Q4 2012
NA
Q2 2012
NA
Jul-05
Q2 2012
H1 2012
Q4 2011
Q4 2011
Vessels
employed
Neptune
NA
NA
NA
NA
NA
Borealis/Eagle/Legend
Condor
NA
Viking
NA
NA
NA
Polaris/Harrier
NA
Date
announced
Jan-11
Jan-11
Feb-11
Feb-11
Feb-11
Feb-11
Mar-11
Mar-11
Apr-11
Apr-11
Apr-11
Apr-11
May-11
May-11
May-11
Jun-11
Jun-11
Jul-11
Jul-11
Sep-11
Sep-11
Nov-11
Nov-11
Dec-11
Dec-11
Installation
start
Q1 2011
Q1 2011
2013
Q2 2011
Q3 2011
Q3 2011
NA
2012
H2 2012
2012
2011
Q3 2012
Q4 2011
2012
2011
H2 2011
2H 2011
Q1 2013
2013
Q3 2012
Q3 2013
H2 2014
Q2 2012
H1 2013
Q3 2013
Avg contract
122
230
190
309
Vessels
employed
Harrier
Acergy
NA
NA
Oceans/Neptune
NA
NA
NA
Oceans/Seas/Seven
NA
NA
NA
NA
NA
NA
NA
Havila/Skandi Acergy
Seven Sea
Sapura 3000
NA
Acergy Polaris
Newbuild
NA
NA
NA
Share
34%
15%
12%
40%
100%
8,538
4,269
02 February 2015
20
89
Company Update
Subsea 7
Summary of Subsea 7 contract awards and the phasing of project revenue (USDm)
Contract
Country
Fletcher-Finucane
Australia
Claire Ridge
UK
Svalin C
Norway
Lihua-4
China
Terra Nova SURF
Canada
Cheviot
UK
Enochdhu pipeline bundle
UK
Knarr
Norway
Lianzi SURF
Congo/Ang.
Varg gas export contract
Norway
SURF for Julimar development Australia
IRM at Foinaven/Schiehallion
UK
Gullfaks C subsea compression Norway
Martin Linge SURF
Norway
Pipeline replacement
UK
Underwater services
Europe
Lianzi topsides
Congo/Ang.
Client
Santos
BP
Statoil
CNOOC
Suncor
ATP
ConocoPhillips
BG
Chevron
Talisman
Apache
BP
Statoil
Total
NA
Shell
Chevron
Date
announced
Jan-12
Feb-12
Feb-12
NA
Mar-12
Mar-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Oct-12
Nov-12
Nov-12
Nov-12
Nov-12
Dec-12
6,967
3,066
Contract
Country
Client
UK
Mexico
UK
Nigeria
Norway
UK
Norway
Brazil
Brazil
Mexico
UK
US
Brazil
Brazil
Brazil
Norway
US
Brazil
Brazil
Ghana
Dana
Pemex
Shell
Esso
Statoil
Talisman
Statoil
Petrobras
Petrobras
Pemex
Statoil
Anadarko
Petrobras
Petrobras
Petrobras
Statoil
Stone Energy
Petrobras
Petrobras
Tullow
8,556
4,084
Installation
start
Q4 2012
2013
Q2 2013
NA
Q3 2012
2014
2014
Q2 2013
H2 2014
Q2 2013
Q4 2014
2013-17
2015
Q2 2014
Q3 2013
2014-16
H2 2014
Avg contract
218
375
120
0
Vessels
employed
Rockwater 2
NA
NA
NA
NA
NA
NA
NA
Seven Oceans
NA
NA
Subsea Viking
NA
Seven Borealis
NA
NA
NA
Share
70%
20%
10%
0%
100%
Installation
start
2014
Q1 2013
2014
Q1 2015
Q1 2014
2014-15
2015-16
2013
2013
Q4 2013
2015
Q4 2014
Q3 2013
Q4 2013
2016/17
2014-17
Q3 2014
Q4 13/Q3 14
NA
mid 2015
Avg contract
224
283
0
537
Vessels
employed
NA
Seven Borealis
NA
Borealis/Pacific
NA
NA
NA
Seven Seas
Kommandor 3000
Seven Borealis
Various
Seven Borealis
Seven Phoenix
Normand Seven
NA
Various
NA
Seven Mar/Condor
Far Saga
Seven Borealis
Share
22%
24%
0%
53%
100%
02 February 2015
21
90
Company Update
Subsea 7
Summary of Subsea 7 contract awards and the phasing of project revenue (USDm)
Contract
Country
Client
Petrobras
ExxonMobil
Shell
BP
Premier Oil
Freeport
CNR
Shell
Hess
Date
announced
Feb-14
Feb-14
Mar-14
May-14
May-14
Jun-14
Oct-14
Nov-14
Dec-14
Installation
start
NA
NA
Q3 2015
Q2 2014
2015
Q4 2015
Q2 2015
Q2 2016
Q3 2016
Avg contract
268
238
0
100
Vessels
employed
Toisa Vigilante/Valiant
NA
Skandi Neptune
Chartered vessels
Various
Seven Sea
Seven Pacific
NA
NA
Share
44%
39%
0%
17%
100%
3,055
5,476
56
3,550
6,297
56
3,791
6,297
60
4,217
7,270
58
3,367
5,165
65
1,292
4,914
26
02 February 2015
22
91
Company Update
Subsea 7
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014E
2015E
2016E
1,100
-15
-955
145
13.2
1,483
+35
-1,218
266
17.9
2,124
+43
-1,695
429
20.2
2,406
+13
-1,859
547
22.7
2,522
+5
-1,874
648
25.7
2,209
-12
-1,684
525
23.8
2,369
+7
-1,701
668
28.2
5,476
+131
-4,530
946
17.3
6,297
+15
-5,202
1,095
17.4
6,297
+0
-5,555
742
11.8
7,270
+15
-5,967
1,303
17.9
5,165
-29
-4,593
572
11.1
4,914
-5
-4,387
527
10.7
-111
-1
-9
0
15
38
3.5
-147
6
-7
0
27
145
9.7
+280
-184
-2
-2
0
41
283
13.3
+96
-228
0
0
0
32
352
14.6
+24
-254
3
0
0
63
461
18.3
+31
-231
0
0
0
49
343
15.5
-26
-307
0
0
0
75
436
18.4
+27
-406
-4
0
0
104
641
11.7
+47
-372
-1
0
0
86
808
12.8
+26
-296
0
0
0
127
573
9.1
-29
-314
0
0
0
86
1,076
14.8
+88
-270
0
0
0
46
348
6.7
-68
-260
0
0
0
46
313
6.4
-10
Investment income
Other gains and losses
Finance costs
Income before taxes
4
36
-19
59
4
-15
-4
130
19
4
-4
302
31
1
-39
344
18
44
-31
492
6
44
-31
361
10
-18
-29
399
20
7
-40
627
16
290
-45
1,069
22
-14
-71
511
19
-15
-31
1,049
14
0
-33
329
12
0
-34
291
Taxation
Tax share of PBT (%)
Income from cont ops
-9
16
50
-13
10
117
-74
24
228
-215
63
129
-163
33
330
-103
28
259
-131
33
268
-176
28
451
-222
21
847
-161
31
350
-282
27
767
-99
30
231
-87
30
204
-40
10
33
150
16
244
6
135
-23
307
7
266
45
313
0
451
0
847
0
350
0
767
0
231
0
204
-5
5
-10
140
-7
237
-7
127
-6
301
-21
245
-48
265
-27
424
-17
830
-2
348
30
796
-20
211
-20
184
352
-86
0
0
0
438
18.2
461
-110
0
-2
0
573
22.7
343
-131
0
-12
-3
488
22.1
436
-119
0
1
-5
559
23.6
641
-338
0
-25
0
1,003
18.3
808
-333
0
3
0
1,139
18.1
573
-359
0
-48
0
981
15.6
1,076
-400
0
-13
0
1,489
20.5
348
-430
0
-16
0
793
15.4
313
-450
0
-16
0
779
15.8
Revenue
Revenue growth (%)
Operating expenses
Gross profit
Gross profit margin (%)
Administration expenses
Net other operating income
Impairment of tangible assets
Impairment of goodwill/intangibles
Share of results of associates and jv
Operating income from cont ops
Operating income margin (%)
Growth in operating income (%)
Minority interests
Net income to equity holders
Operating income from cont ops
Depreciation
Mobilisation costs (amortised)
Impairment of long lived assets
Impairment of goodwill/intangible assets
EBITDA
EBITDA margin
-61
-12
-9
-57
-13
-7
120
10.9
221
14.9
283
-59
-15
-2
0
358
16.9
0
120
10.9
0
221
14.9
0
358
16.9
0
438
18.2
0
573
22.7
0
488
22.1
0
559
23.6
-50
1,053
19.2
-52
1,191
18.9
-355
1,336
21.2
75
1,414
19.4
0
793
15.4
0
779
15.8
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014E
2015E
2016E
157.6
1.9
0.0
159.5
191.1
4.4
0.0
195.5
192.7
5.6
2.8
201.1
188.4
4.1
0.0
192.6
184.1
2.1
20.8
207.1
182.9
0.8
22.0
205.7
183.5
1.0
22.2
206.7
323.8
1.8
40.8
366.3
333.8
1.5
44.9
380.2
332.9
1.0
40.7
374.7
330.7
0.8
37.2
368.7
323.5
0.8
23.9
348.1
320.5
0.8
23.9
345.1
5.1
44.9
139.5
-33.1
106.4
0.0
106.4
236.7
-15.8
220.9
1.6
222.5
127.3
-5.7
121.6
0.0
121.6
301.4
22.5
323.9
28.4
352.3
244.9
-7.2
237.7
29.5
267.2
265.4
-44.6
220.8
19.0
239.8
423.7
0.0
423.7
20.5
444.2
830.4
0.0
830.4
17.8
848.2
347.6
0.0
347.6
23.9
371.5
796.3
0.0
796.3
14.2
810.5
210.6
0.0
210.6
13.0
223.6
183.7
0.0
183.7
13.0
196.7
0.28
-0.25
0.03
0.56
0.17
0.73
1.15
0.08
1.23
0.65
0.03
0.68
1.76
-0.12
1.64
1.30
0.04
1.34
1.20
0.24
1.45
1.31
0.00
1.31
2.49
0.00
2.49
1.04
0.00
1.04
2.41
0.00
2.41
0.65
0.00
0.65
0.57
0.00
0.57
0.28
-0.25
0.03
0.54
0.17
0.71
1.11
0.08
1.18
0.63
0.03
0.66
1.70
-0.11
1.59
1.30
0.04
1.33
1.16
0.22
1.38
1.21
0.00
1.21
1.59
0.00
1.59
0.99
0.00
0.99
2.20
0.00
2.20
0.64
0.00
0.64
0.57
0.00
0.57
02 February 2015
23
92
Company Update
Subsea 7
2011
2012
2013
2014E
2015E
2016E
2,054
2,543
181
686
12
5,476
2,838
2,182
278
987
12
6,297
2,514
2,454
498
814
17
6,297
2,774
2,594
894
995
13
7,270
1,803
1,945
626
776
15
5,165
1,713
1,751
582
854
15
4,914
+38
-14
+54
+44
+2
+15
-11
+12
+80
-17
+40
+0
+10
+6
+79
+22
-23
+15
-35
-25
-30
-22
+12
-29
-5
-10
-7
+10
+0
-5
179
490
18
23
-70
641
364
428
46
-25
-4
808
395
402
86
-318
8
573
429
328
93
201
26
1,076
108
117
38
85
0
348
86
88
29
111
0
313
8.7
19.3
10.1
3.3
11.7
12.8
19.6
16.6
-2.6
12.8
15.7
16.4
17.3
-39.0
9.1
15.5
12.6
10.3
20.2
14.8
6.0
6.0
6.0
11.0
6.7
5.0
5.0
5.0
13.0
6.4
02 February 2015
24
93
Company Update
Subsea 7
Q3/12
Q4/12
2012
Q1/13
Q2/13
Q3/13
Q4/13
2013
Q1/14
Q2/14
Q3/14 Q4/14E
2014E
Revenues
Revenue growth (%)
1,744
+22
1,611
+14
6,297
+15
1,467
+1
1,681
+13
1,564
-10
1,586
-2
6,297
+0
1,668
+14
1,905
+13
1,902
+22
1,795
+13
Operating expenses
Gross profit
Gross profit margin (%)
-1,429
314.3
18.0
-1,368 -5,202
242.7 1,095.0
15.1
17.4
-1,253
214.3
14.6
-1,636
44.2
2.6
-1,269
294.4
18.8
-1,396
189.5
12.0
-5,555
742.4
11.8
-1,437
230.9
13.8
-1,515
389.8
20.5
-1,516
386.0
20.3
-1,498 -5,967
296.6 1,303.3
16.5
17.9
Administration expenses
Net other operating income/(loss)
Share of results of associates
Net operating income
Net operating margin (%)
-98.3
0.0
12.2
228.2
13.1
-105.8
0.0
43.5
180.4
11.2
-372.3
-0.8
86.3
808.2
12.8
-75.6
0.0
15.5
154.2
10.5
-65.7
0.0
62.1
40.6
2.4
-74.1
0.0
48.9
269.2
17.2
-80.7
0.0
0.6
109.4
6.9
-296.1
0.0
127.1
573.4
9.1
-80.8
0.0
15.7
165.8
9.9
-67.1
0.0
27.1
349.8
18.4
-85.9
0.0
24.1
324.2
17.0
-80.0 -313.8
0.0
0.0
19.1
86.0
235.7 1,075.5
13.1
14.8
Investment income
Other gains and losses
Finance costs
Income before taxes
2.4
25.8
-8.9
247.5
6.1
15.8
2.7
289.6
-18.6
-44.8
170.6 1,068.8
7.1
21.3
-24.7
157.9
6.9
-10.8
-16.7
20.0
4.7
-38.0
-16.8
219.1
3.5
13.6
-12.7
113.8
22.2
-13.9
-70.9
510.8
4.1
8.5
-5.2
173.2
8.9
10.5
-7.0
362.2
3.7
-34.2
-5.5
288.2
2.6
19.3
0.0
-15.2
-13.4
-31.1
225.0 1,048.6
Taxation
Tax share of PBT (%)
Income from continuing ops
-53.3
21.5
194.2
-21.8
12.8
148.8
-221.6
20.7
847.2
-26.0
16.5
131.9
-33.4
167.0
-13.4
-59.5
27.2
159.6
-42.0
36.9
71.8
-160.9
31.5
349.9
-36.4
21.0
136.8
-97.6
26.9
264.6
-82.7
28.7
205.5
-65.2
29.0
159.7
-281.9
26.9
766.6
0.0
194.2
-9.8
184.4
+12
0.0
148.8
-7.9
140.9
+40
0.0
847.2
-16.8
830.4
+96
0.0
131.9
1.7
133.6
+46
0.0
-13.4
-3.9
-17.3
-104
0.0
159.6
-7.5
152.1
-18
0.0
71.8
7.4
79.2
-44
0.0
349.9
-2.3
347.6
-58
0.0
136.8
15.9
152.7
+14
0.0
264.6
5.7
270.3
-1662
0.0
205.5
4.1
209.6
+38
0.0
159.7
4.0
163.7
+107
0.0
766.6
29.7
796.3
+129
0.56
0.00
0.56
0.43
0.00
0.43
2.49
0.00
2.49
0.40
0.00
0.40
-0.05
0.00
-0.05
0.46
0.00
0.46
0.24
0.00
0.24
1.04
0.00
1.04
0.46
0.00
0.46
0.82
0.00
0.82
0.64
0.00
0.64
0.50
0.00
0.50
2.41
0.00
2.41
0.44
0.00
0.44
0.38
0.00
0.38
1.59
0.00
1.59
0.35
0.00
0.35
-0.04
0.00
-0.04
0.42
0.00
0.42
0.22
0.00
0.22
0.99
0.00
0.96
0.41
0.00
0.41
0.73
0.00
0.73
0.57
0.00
0.57
0.47
0.00
0.47
2.20
0.00
2.20
7,270
+15
02 February 2015
25
94
Company Update
Subsea 7
Q3/12
Q4/12
2012
Q1/13
Q2/13
Q3/13
Q4/13
2013
Q1/14
Q2/14
Q3/14 Q4/14E
847
506
52
338
1
1,744
699
611
55
241
5
1,611
2,838
2,182
278
987
12
6,297
596
529
123
217
2
1,467
705
669
142
159
6
1,681
670
583
73
233
6
1,564
544
673
160
206
4
1,586
2,514
2,454
498
814
17
6,297
558
669
205
231
5
1,668
732
661
243
265
4
1,905
784
624
246
249
-1
1,902
700
640
200
250
5
1,795
2,774
2,594
894
995
13
7,270
+33
-16
+37
+119
+22
+19
+1
+44
+29
+14
+38
-14
+54
+44
+15
+3
+0
+44
-17
+1
-1
+24
+67
+8
+13
-21
+15
+41
-31
-10
-22
+10
+191
-15
-2
-11
+12
+80
-17
+0
-6
+27
+66
+6
+14
+4
-1
+71
+67
+13
+17
+7
+237
+7
+22
+29
-5
+25
+22
+13
+10
+6
+79
+22
+15
Operating profit
NSMC
AFGoM
APME
Brazil
Corporate
Total
105
125
-2
1
-1
228
88
97
18
-29
8
180
364
428
46
-25
-4
808
85
86
15
-22
-10
154
136
133
33
-294
32
41
111
94
30
10
24
269
63
89
9
-13
-39
109
395
402
86
-318
8
573
73
77
11
19
-14
166
156
85
22
57
30
350
109
83
35
88
10
324
91
83
24
38
0
236
429
328
93
201
26
1,076
12.4
24.7
-3.5
0.4
13.1
12.6
15.8
32.1
-12.2
11.2
12.8
19.6
16.6
-2.6
12.8
14.2
16.3
11.8
-10.0
10.5
19.3
19.9
23.2
-184.7
2.4
16.6
16.0
41.3
4.5
17.2
11.6
13.3
5.3
-6.2
6.9
15.7
16.4
17.3
-39.0
9.1
13.0
11.4
5.6
8.2
9.9
21.4
12.9
9.1
21.3
18.4
13.9
13.3
14.2
35.2
17.0
13.0
13.0
12.0
15.0
13.1
15.5
12.6
10.3
20.2
14.8
2,629
2,790
647
2,022
8,088
3,725
2,817
727
1,817
9,086
3,725
2,817
727
1,817
9,086
4,498
3,373
613
1,738
10,222
4,168
3,231
729
2,293
10,421
4,012
2,950
826
4,012
11,800
3,766
2,943
706
4,355
11,770
3,766
2,943
706
4,355
11,770
3,812
2,772
578
4,390
11,552
3,807
2,687
560
4,143
11,197
2,923
2,263
472
3,772
9,430
2,423
2,123
572
3,522
8,235
2,423
2,123
572
3,522
8,235
Q3/14 Q4/14E
2014E
Backlog
NSMC
AFGoM
APME
Brazil
Total
2014E
Q4/12
2012
Q1/13
Q2/13
Q3/13
Q4/13
2013
Q1/14
Q2/14
1,850
759
2,609
3,720
3,125
6,845
2,500
103
2,603
710
1,170
1,880
2,660
283
2,943
1,160
396
1,556
7,030
1,951
8,981
275
1,175
1,450
670
880
1,550
70
368
438
195
405
600
1,210
2,828
4,038
0
2,609
2,609
0
6,845
6,845
0
2,603
2,603
350
1,530
1,880
2,450
493
2,943
600
956
1,556
3,400
5,581
8,981
0
1,450
1,450
0
1,550
1,550
0
438
438
0
600
600
0
4,038
4,038
Revenue
Revenue growth (%)
1,611
+14
6,297
+15
1,467
+1
1,681
+13
1,564
-10
1,586
-2
6,297
+0
1,668
+14
1,905
+13
1,902
+22
1,795
+13
7,270
+15
PLSV revenue
PLSV revenue growth (%)
Non PLSV revenue
67
+0
1,544
266
+0
6,030
65
-1
1,402
67
+0
1,614
63
-7
1,501
93
+39
1,493
287
+8
6,010
96
+49
1,572
100
+49
1,805
131
+108
1,771
136
+46
1,659
463
+61
6,807
02 February 2015
26
95
Company Update
Subsea 7
Q2/12
Q3/12
Q4/12
2012
Q1/13
Q2/13
Q3/13
Q4/13
2013
Q1/14
Q2/14
Q3/14 Q4/14E
2014E
100
151
14
117
100
151
14
103
100
151
14
89
100
151
55
89
100
151
13
76
100
151
14
62
100
151
14
48
100
151
14
34
100
151
55
34
100
151
13
21
100
151
14
7
50
151
7
0
0
0
0
0
63
151
34
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
300
0
0
0
300
0
0
0
300
0
0
0
300
50
274
13
288
100
274
25
263
38
274
38
263
Q2/12
Q3/12
Q4/12
2012
Q1/13
Q2/13
Q3/13
Q4/13
2013
Q1/14
Q2/14
Q3/14 Q4/14E
2014E
100
114
10
42
100
114
10
31
100
114
10
21
100
114
42
21
100
114
10
10
100
114
10
0
0
0
0
0
0
0
0
0
50
114
21
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
351
0
0
0
351
100
192
18
333
25
192
18
333
100
192
17
316
100
192
18
298
100
192
18
280
100
192
18
263
100
192
70
263
Q2/12
Q3/12
Q4/12
2012
Q1/13
Q2/13
Q3/13
Q4/13
2013
Q1/14
Q2/14
Q3/14 Q4/14E
2014E
100
178
16
90
100
178
16
73
100
178
16
57
100
178
65
57
100
178
16
41
100
178
16
25
100
178
16
8
50
178
8
0
88
178
57
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
50
274
13
288
13
274
13
288
100
274
24
263
100
274
25
238
100
274
25
213
100
274
25
188
100
274
100
188
Q2/12
Q3/12
Q4/12
2012
Q1/13
Q2/13
Q3/13
Q4/13
2013
Q1/14
Q2/14
Q3/14 Q4/14E
2014E
100
171
16
86
100
171
16
70
100
171
16
55
100
171
63
55
100
171
15
39
100
171
16
24
100
171
16
8
50
171
8
0
88
171
55
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
400
50
219
10
390
13
219
10
390
100
219
19
370
100
219
20
350
100
219
20
330
100
219
20
310
100
219
80
310
Q2/12
Q3/12
Q4/12
2012
Q1/13
Q2/13
Q3/13
Q4/13
2013
Q1/14
Q2/14
Q3/14 Q4/14E
2014E
100
114
10
47
100
114
10
36
100
114
10
26
100
114
42
26
100
114
10
16
100
114
10
5
50
114
5
0
0
0
0
0
63
114
26
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
50
247
11
462
100
247
23
440
38
247
34
440
100
247
22
418
100
247
23
395
100
247
23
372
100
247
23
349
100
247
90
349
02 February 2015
27
96
Company Update
Subsea 7
Q2/12
Q3/12
Q4/12
2012
Q1/13
Q2/13
Q3/13
Q4/13
2013
Q1/14
Q2/14
0
0
0
500
0
0
0
500
0
0
0
500
0
0
0
500
0
0
0
500
0
0
0
500
100
0
0
500
100
0
0
500
50
0
0
500
100
0
0
500
100
0
0
500
Seven Sun
Contract 1 (signed Q3 2013)
Utilisation (%)
Day rate
Revenue
Backlog
Q2/12
Q3/12
Q4/12
2012
Q1/13
Q2/13
Q3/13
Q4/13
2013
Q1/14
Q2/14
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
533
0
0
0
533
0
0
0
533
0
0
0
533
0
0
0
533
Seven Rio
Contract 1 (signed Q3 2013)
Utilisation (%)
Day rate
Revenue
Backlog
Q2/12
Q3/12
Q4/12
2012
Q1/13
Q2/13
Q3/13
Q4/13
2013
Q1/14
Q2/14
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
533
0
0
0
533
0
0
0
533
0
0
0
533
0
0
0
533
Seven Cruzeiro
Contract 1 (signed Q3 2013)
Utilisation (%)
Day rate
Revenue
Backlog
Q2/12
Q3/12
Q4/12
2012
Q1/13
Q2/13
Q3/13
Q4/13
2013
Q1/14
Q2/14
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
533
0
0
0
533
0
0
0
533
0
0
0
533
0
0
0
533
Totals
PLSV revenue
PLSV backlog
Q2/12
67
882
Q3/12
67
815
Q4/12
67
748
2012
266
748
Q1/13
65
683
Q2/13
67
966
Q3/13
63
3,376
Q4/13
93
3,883
2013
287
3,883
Q1/14
96
3,787
Group revenue
Non PLSV revenue
1,484
1,417
1,744
1,677
1,611
1,544
6,297
6,030
1,467
1,402
1,681
1,614
1,564
1,501
1,586
1,493
6,297
6,010
Group backlog
YoY growth (%)
Non PLSV backlog
YoY non PLSV growth (%)
8,285
+5
7,403
+2
8,088
+2
7,273
-1
9,086
+6
8,338
+11
9,086 10,222
+6
+18
8,338 9,539
+11
+23
10,421
+26
9,455
+28
11,800
+46
8,424
+16
11,770
+30
7,887
-5
3,645
44
213
3,432
57
3,801
47
213
3,588
60
2,544
28
85
2,459
36
2,544
28
85
2,459
36
4,064
39
193
3,872
57
4,720
40
363
4,357
64
2,589
22
554
2,036
44
3,578
35
85
3,493
51
Q3/14 Q4/14E
100
274
25
475
2014E
100
274
25
450
100
274
50
450
Q3/14 Q4/14E
2014E
0
0
0
533
0
0
0
533
0
0
0
533
Q3/14 Q4/14E
2014E
0
0
0
533
0
0
0
533
0
0
0
533
Q3/14 Q4/14E
2014E
0
0
0
533
0
0
0
533
0
0
0
533
Q2/14
100
3,687
Q3/14 Q4/14E
131
136
3,557 3,421
2014E
463
3,421
1,668
1,572
1,905
1,805
1,902
1,771
1,795
1,659
7,270
6,807
11,770
+30
7,887
-5
11,552
+13
7,765
-19
11,197
+7
7,510
-21
9,430
-20
5,873
-30
8,235
-30
4,814
-39
8,235
-30
4,814
-39
2,589
22
554
2,036
44
3,004
26
554
2,450
53
3,807
34
554
3,253
71
3,866
41
554
3,313
72
02 February 2015
28
97
Company Update
Subsea 7
Overview
Investment case
We see risks of deteriorating fleet utilisation in 2015, following weak order intake
recently, particularly if we exclude PLSV awards. The backlog for execution in 2015
is below that booked for 2014 a year ago, and with concerns over near-term awards
we see risks increasing that consensus forecasts for next year may need to fall. The
scale of order intake in the next few months, and the contribution those awards
provide to 2015 revenue will be critical in determining the degree of downgrades in
our view.
Company profile
Subsea 7, formed through the merger of Acergy and Subsea 7 in January 2011,
designs, procures, fabricates, installs and maintains subsea pipeline and riser
systems for the global offshore oil and gas industry. With roots dating back to the
1960s and the early days of offshore exploration and production in northern Europe,
Subsea 7 has been servicing the offshore oil and gas industry for more than 30
years. The company offers services to the following segments: subsea, umbilicals,
risers and flowlines (SURF), the conventional installation of platforms and pipelines,
and the inspection, maintenance and repair market (IMR).
Valuation approach
Our NOK 46 target price is based on a 50% discount to tangible equity book
value.50% discount to tangible equity book value.
The main risks to our Sell rating are the scale of near-term order intake and a
potential shift in Subsea 7's backlog execution schedule. More specifically slower
execution during 2014, which may already be reflected in the company's guidance,
could leave revenue visibility for 2015 better than is currently indicated.
Revenues by region
Norway: 16%
Other Europe: 42%
Asia: 0%
Revenues by division
Source: SEB
SURF 72%
Life of Field (IMR) 12%
Other Nordic: 0%
Americas: 12%
RoW: 30%
Conventional 12%
i-Tech/VERIPOS 4%
Source: SEB
02 February 2015
29
98
Company Update
Subsea 7
35
30
25
(%)
15
10
5
0
2007
2010
2013
2016
2010
2013
Source: SEB
2.5
2.0
(x)
(x)
1.5
1.0
0.5
0.0
2007
2010
2013
2016
18
16
14
12
10
8
6
4
2
0
2007
2010
Source: SEB
Source: SEB
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2016
4,000
25.0
20.0
3,500
20.0
3,000
(USDm)
15.0
10.0
2,000
1,500
2011
Net sales
2013
5.0
500
0
0.0
2009
10.0
1,000
5.0
2007
15.0
2,500
(%)
(USDm)
2013
0.0
2007
2015E
2009
EBITDA margin
2011
EBIT
Source: SEB
130
2013
2015E
Operating margin
Source: SEB
160
120
110
140
100
120
90
100
80
80
70
60
Feb 14
2016
(%)
(x)
20
800
700
600
500
400
300
200
100
0
2007
May 14
Subsea 7
Aug 14
Nov 14
Jan 15
Source: SIX
60
Feb 14
May 14
Subsea 7
Aug 14
Nov 14
Jan 15
Rel Saipem
Source: SIX
02 February 2015
30
99
Company Update
Subsea 7
2007
2,406
0
2,406
2008
2,522
0
2,522
2009
2,209
0
2,209
2010
2,369
0
2,369
2011
5,476
0
5,476
2012
6,297
0
6,297
2013
6,297
0
6,297
2014E
7,270
0
7,270
2015E
5,165
0
5,165
2016E
4,914
0
4,914
(1,968)
438
(1,949)
573
(1,721)
488
(1,810)
559
(4,473)
1,003
(5,158)
1,139
(5,317)
981
(5,781)
1,489
(4,372)
793
(4,136)
779
(86)
0
0
0
352
(112)
0
0
0
461
(146)
0
0
0
343
(123)
0
0
0
436
(363)
0
0
0
641
(331)
0
0
0
808
(407)
0
0
0
573
(414)
0
0
0
1,076
(446)
0
0
0
348
(466)
0
0
0
313
Associated companies
Net interest expenses
Foreign exchange items
Other financial items
Value changes - Fixed assets
Value changes - Financial assets
Value changes - Other assets
Reported pre-tax profit
6
(8)
0
1
0
0
0
350
(23)
(13)
0
44
0
0
0
470
7
(25)
0
44
0
0
0
369
45
(19)
0
(18)
0
0
0
444
0
(20)
0
7
0
0
0
627
0
(29)
0
290
0
0
0
1,069
0
(49)
0
(14)
0
0
0
511
0
(12)
0
(15)
0
0
0
1,049
0
(18)
0
0
0
0
0
329
0
(22)
0
0
0
0
0
291
Minority interests
Total taxes
Reported profit after tax
(7)
(215)
127
(6)
(163)
301
(21)
(103)
245
(48)
(131)
265
(27)
(176)
424
(17)
(222)
830
(2)
(161)
348
30
(282)
796
(20)
(99)
211
(20)
(87)
184
Discontinued operations
Extraordinary items
Net Profit
0
0
127
0
0
301
0
0
245
0
0
265
0
0
424
0
0
830
0
0
348
0
0
796
0
0
211
0
0
184
Adjustments:
Discontinued operations
Interest on convertible debt
Minority interests (IFRS)
Value changes
Goodwill/intangibles amortisations
Restructuring charges
Other adjustments
Tax effect of adjustments
Adjusted profit after tax
0
0
0
0
0
0
0
0
127
0
28
0
0
0
0
0
0
330
0
30
0
0
0
0
0
0
274
0
19
0
0
0
0
0
0
284
0
21
0
0
0
0
0
0
444
0
18
0
0
0
0
0
0
848
0
24
0
0
0
0
0
0
372
0
14
0
0
0
0
0
0
811
0
13
0
0
0
0
0
0
224
0
13
0
0
0
0
0
0
197
14.6
14.5
61.5
31.8
43.2
18.3
18.6
34.6
41.5
36.5
15.5
16.7
27.9
29.6
25.6
18.4
18.7
29.5
9.2
12.9
11.7
11.4
28.1
8.1
10.3
12.8
17.0
20.7
14.0
11.2
9.1
8.1
31.5
5.8
7.7
14.8
14.4
26.9
11.8
14.0
6.7
6.4
30.0
3.1
4.4
6.4
5.9
30.0
2.6
3.8
n.a.
n.m.
n.m.
0.0
4.8
31.1
34.4
140.9
(12.4)
(25.6)
(21.6)
(16.2)
7.3
27.3
20.4
3.1
131.2
46.9
41.3
(11.9)
15.0
26.2
70.5
84.0
0.0
(29.1)
(52.2)
(55.6)
15.4
87.6
105.3
121.4
(29.0)
(67.7)
(68.6)
(70.8)
(4.9)
(9.9)
(11.6)
(11.2)
(USDm)
Net profit
Non-cash adjustments
Cash flow before work cap
2007
127
88
215
2008
301
141
442
2009
245
159
404
2010
265
126
392
2011
424
390
814
2012
830
347
1,178
2013
348
410
757
2014E
796
384
1,180
2015E
211
466
676
2016E
184
486
669
52
267
69
511
30
434
(86)
306
(152)
662
(307)
871
266
1,023
17
1,197
(36)
640
(4)
665
Capital expenditures
Asset disposals
L/T financial investments
Acquisitions / adjustments
Free cash flow
(261)
(81)
0
0
(75)
(293)
40
0
0
259
(172)
(33)
0
0
229
(593)
22
0
0
(264)
(669)
(2)
0
0
(9)
(909)
(245)
0
0
(282)
(739)
(196)
0
0
88
(1,035)
0
0
0
162
(1,035)
0
0
0
(395)
(515)
0
0
0
150
(120)
(39)
0
0
(233)
30
(39)
0
0
249
(4)
(40)
0
0
185
481
(42)
0
(0)
174
(3)
0
0
0
(12)
642
(203)
0
0
157
(624)
(199)
0
0
(735)
(12)
(200)
0
(0)
(50)
100
0
0
0
(295)
0
0
0
0
150
215
0
0
215
442
0
28
470
404
0
30
434
392
0
19
411
814
0
21
834
1,178
(0)
18
1,196
757
(0)
24
781
1,180
0
14
1,194
676
0
13
689
669
0
13
682
1.12
1.39
(0.39)
2.27
2.61
1.39
2.11
2.25
1.26
1.99
1.57
(1.19)
2.28
1.86
0.03
3.14
2.34
(0.7)
2.08
2.8
0.3
3.23
3.28
0.48
1.98
1.87
(1.1)
1.97
1.96
0.47
Investment cover
Capex/sales (%)
Capex/depreciation (%)
10.8
302
11.6
261
7.8
118
25.0
481
12.2
184
14.4
275
11.7
181
14.2
250
20.0
232
10.5
111
Total expenses
Profit before depreciation
Cash flow
Adjustments
C/flow bef chng in work cap
Adjustments
Int on conv debt net of tax
Cash earnings
02 February 2015
31
100
Company Update
Subsea 7
2007
592
485
0
325
1,402
2008
584
355
0
393
1,332
2009
908
298
0
538
1,743
2010
1,087
584
0
907
2,577
2011
803
773
0
1,338
2,914
2012
1,288
1,090
0
1,443
3,821
2013
670
1,008
0
1,459
3,137
2014E
619
1,164
0
1,685
3,467
2015E
324
827
0
1,197
2,348
2016E
474
787
0
1,139
2,399
0
106
0
0
4
814
101
1,025
0
140
0
0
4
908
88
1,139
0
190
0
0
9
822
69
1,090
0
188
0
2,296
33
3,027
87
5,630
0
264
0
2,567
35
3,352
116
6,334
0
0
0
2,575
24
3,748
327
6,674
0
0
0
2,585
25
4,098
514
7,221
0
0
0
2,585
25
4,720
514
7,842
0
0
0
2,585
25
5,309
514
8,432
0
0
0
2,585
25
5,359
514
8,481
Total assets
2,427
2,471
2,833
8,207
9,248
10,495
10,357
11,310
10,780
10,881
Creditors
Other trade financing
S/T interest bearing debt
Other
Current liabilities
940
0
3
157
1,100
1,035
0
10
69
1,114
1,123
0
0
98
1,221
1,669
0
239
121
2,029
2,069
0
13
190
2,272
2,174
0
495
201
2,869
2,464
0
275
111
2,851
2,845
0
300
128
3,273
2,021
0
300
91
2,412
1,923
0
300
87
2,310
387
34
0
50
2
36
508
409
61
0
21
8
56
556
416
9
0
27
11
50
513
658
50
0
23
0
282
1,013
881
77
0
29
23
133
1,143
1,041
44
0
23
38
112
1,258
636
34
0
19
36
170
895
600
34
0
19
35
170
858
700
34
0
19
35
170
958
700
34
0
19
35
170
958
18
14
31
31
52
44
47
17
37
57
801
788
1,068
5,135
5,781
6,325
6,566
7,162
7,372
7,556
2,427
2,471
2,833
8,207
9,248
10,495
10,357
11,310
10,780
10,881
(152)
(287)
1,258
(19)
(0.3)
34
9.8
(144)
(356)
1,242
(18)
(0.3)
32
15.7
(465)
(386)
1,542
(42)
(0.9)
39
11.1
(168)
(300)
6,084
(3)
(0.3)
63
15.5
119
(148)
6,755
2
0.1
63
16.3
271
158
7,927
4
0.2
61
18.4
261
(108)
7,543
4
0.3
64
8.4
300
(125)
8,098
4
0.2
63
35.2
695
(89)
8,428
9
0.9
69
11.1
545
(84)
8,632
7
0.7
70
9.5
(USD)
2007
2008
2009
2010
2011
2012
2013
2014E
2015E
2016E
192.6
192.6
207.1
207.1
204.5
205.7
206.9
206.7
347.9
366.3
398.7
380.2
375.2
374.7
369.2
369.2
348.7
348.7
345.7
345.7
119.5
168.0
105.2
132.5
38.4
141.9
25.1
87.9
90.3
91.5
31.0
59.7
140.9
144.3
85.1
106.6
109.4
153.6
97.9
127.0
132.1
152.6
107.2
129.4
116.1
144.0
40.9
126.1
65.9
127.5
63.9
101.8
65.9
65.9
0.66
0.66
1.12
0.21
1.59
1.59
2.27
0.22
1.33
1.33
2.11
0.23
1.38
1.38
1.99
0.00
1.21
1.21
2.28
0.60
2.23
2.23
3.14
0.60
0.99
0.99
2.08
0.60
2.20
2.20
3.23
0.00
0.64
0.64
1.98
0.00
0.57
0.57
1.97
0.60
21
4.2
4.2
4.8
4.2
4.2
13.4
5.8
5.8
23
28
28
18.6
17.8
17.8
24
18.9
18.9
19.7
19.7
19.7
9.2
21
21
10.4
22
22
10.0
23
23
PER (adjusted)
CEM
Dividend yield
33.4
19.8
1.0
3.4
2.4
4.0
11.7
7.4
1.5
17.5
12.1
0.0
15.0
8.0
3.3
10.6
7.5
2.5
19.2
9.1
3.2
3.8
2.6
0.0
13.2
4.3
0.0
14.8
4.3
7.1
EV/EBITDA
EV/EBIT
EV/Sales (x)
Price/Book value
Price/adjusted equity
9.2
11.5
1.70
5.31
5.31
1.8
2.3
0.39
1.30
1.30
5.5
7.8
1.24
2.69
2.69
8.0
10.0
2.03
0.86
0.86
6.4
10.1
1.18
1.03
1.03
8.5
12.0
1.55
1.26
1.26
7.5
12.9
1.17
0.97
0.97
2.3
3.2
0.47
0.39
0.39
4.6
10.5
0.70
0.38
0.38
4.4
11.0
0.70
0.37
0.37
0.1
6.5
3.3
19.2
51.5
0.8
8.1
15.9
1.8
(5.8)
6.4
0.8
(0.1)
10.2
1.0
(0.4)
8.9
1.2
4.0
13.9
1.0
5.2
35.1
0.4
(13.4)
17.6
0.4
5.1
19.2
0.4
Minority interests
Shareholders' equity
Valuation
EPS (reported)
EPS (adjusted)
Cash earnings/share
Dividend/share
Enterprise value/share
Book value/share
Adjusted equity/share
Main shareholders
Name
Folketrygdfondet
Siem Industries Inc
Siem Industries Inc
Management
(%) Votes
8.6
6.9
6.8
Capital
8.6
6.9
6.8
Title
COB
CEO
CFO
IR
Company information
Name
Kristian Siem
Jean Cahuzac
Ricardo Rosa
Keith Russell
Contact
Internet
Phone number
Fax number
www.subsea7.com
+44 (0)20 8210 5500
+44 (0)20 8210 5501
02 February 2015
32
101
Company Update
Subsea 7
Normal risk: All forecasts involve uncertainty and we view companies in this risk level
to have normal forecast risks
High risk: The earnings forecasts are more uncertain than for an average listed
company due to business model, operating risk, financial risk or any other reason at
the analysts discretion. All companies with shorter track record than 12 months as a
listed company are by definition classified as high risk according to SEB.
02 February 2015
33
102
Company Update
Subsea 7
02 February 2015
34
103
Company Update
Subsea 7
02 February 2015
35
104
Buy
Hold
Sell
Unrated
Consolidated distribution
as per 31 Dec 2014 (%)
Investment banking
clients last 12M
51.4
37.5
11.1
10.7
3.6
0.8
Source: SEB
13
180
160
140
120
100
80
60
40
Jan 10
Jan 11
Jan 12
Jan 13
Jan 14
Jan 15
SUBC.OL
Source: Thomson Reuters / SIX / SEB
Copenhagen
Bernstorffsgade 50
P.O. Box 100
DK-1577 Copenhagen V
Frankfurt
Stephanstrasse 14-16
D-60313 Frankfurt am Main
Helsinki
Unioninkatu 30
P.O. Box 630
FIN-00101 Helsinki
Hong Kong
17/F Jardine House
1 Connaught Place
Central, Hong Kong Island
Hong Kong
London
Scandinavian House
2 Cannon Street
London, EC4M 6XX
New York
245 Park Avenue, 33rd Floor
New York
NY 10167
Oslo
Filipstad Brygge 1,
P.O. Box 1363 Vika
NO-0113 Oslo
Stockholm
Kungstrdgrdsgatan 8
S-106 40 Stockholm
Tallinn
Tornime 2
EE-Tallinn 15010
Telephone: (372) 665 7762
105