Financially positioned to deliver on strategy - Aker Solutions

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Financially positioned to deliver on strategy - Aker Solutions

part of Akerong>Financiallyong> ong>positionedong>ong>toong> ong>deliverong> on strategyLeif Borge, EVP & CFOCapital Markets Day3 December 2009© 2009 Aker SolutionsProfit growthOperating revenues(NOK Million)EBITDA(bars: NOK Million)margin(line: %)Earnings per share 1)(NOK)60 00050 0004 0008%840 00042B3 0003.3B 6.896%630 0002 0004%420 00010 0001 0002%2000%0‘04 ‘05 ‘06 ‘07 ‘08 Q1-Q3‘04 ‘05 ‘06 ‘07 ‘08 Q1-Q3‘04 ‘05 ‘06 ‘07 ‘08 Q1-Q3Note: ¹ Basic and diluted EPSCapital Markets Day 03 December 2009 Slide 2© 2009 Aker Solutions part of Aker


Investing in products and services ong>toong> move inong>toong> highermargin and more stable businessProduction capacity,BrazilProductioncapacity,MalaysiaWellinterventionvesselsWellservicesRio das Ostras, BrazilService bases,globallySubsea ong>toong>ol poolCapital Markets Day 03 December 2009 Slide 5© 2009 Aker Solutions part of AkerIncreasing capital intensity, return on equity still solidReturn on capital (%, after tax)40 %20 %26 %33 %14 %20 %15 %30 %■■Investments influencereturn on capitalemployed, but:Return on equitystill strong0 %ROCEROEROCEROEROCEROE2007 2008 2009Capitalemployed: 8.8B 15.7B 18.8BNet debt: -2.5B 2.3B 4.9B1)Note: ROCE = Return on capital employed; ROE = Return on equityROCE and ROE after tax; 1) 2009 = YTD Q3 annualisedCapital Markets Day 03 December 2009 Slide 6© 2009 Aker Solutions part of Aker


Strong return on capital in three of four business areas- Subsea still in investment phaseReturn on capital employed 2009¹(after tax)40 %■ED&S solid return on capital20 %16 %25 %28 %■■Expecting more stablereturns going forwardSubsea still in investment phase■ Growing life cycle business■ No contribution from AkerOilfield Services yet9 %■P&T strong return on capital■ Life cycle business still inearly phase0 %ED&S Subsea P&T P&C1)■P&C very strong return on capital■ Cash positive businessNote: ROCE = Return on capital employed, after tax; ¹2009 = YTD Q3 annualisedCapital Markets Day 03 December 2009 Slide 7© 2009 Aker Solutions part of AkerDifferent working capital development fordifferent project typesIllustrative“Project”(field development)“Product”(drilling package)“Service”(subsea ong>toong>ol rental)cash balance cash balance working capital(acc. receivables)(invenong>toong>ry)t t t■■Gradual paymentsSeveral milesong>toong>nes■■■Initial cash installmentWorking capital build-upMilesong>toong>ne payments uponong>deliverong>y■■Invenong>toong>ries of spareparts, ong>toong>ols etc.~30 receivable daysCapital Markets Day 03 December 2009 Slide 8© 2009 Aker Solutions part of Aker


Hisong>toong>rically, net working capital has fluctuatedNet current operating assets (NCOA)(NOK million) ■ Transformation from4 000project-based work ong>toong>wardsmore product-based work■ Hisong>toong>rical working capital2 000development influenced bysome large individualprojects0-2 000-4 000Special projectinstallmentQ4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q304 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09■■Strong order intake in somesegments will give workingcapital fluctuations, buteven out over timeContinued products andservices growth mayincrease working capitalgraduallyCapital Markets Day 03 December 2009 Slide 9© 2009 Aker Solutions part of AkerExpecting high capex programme for another two yearsCapex by business areaNOK million2 0001 0000GrowthMaintenance2006 2007 2008 2009 2010 2011 2012■ Maintenance capex goingforward NOK 600-700Mper year¹■ Still some ongoinggrowth capex inong>toong>Subsea life cycleservices■ Investing NOK 50-70Mper year in Aker DOFDeepwater 2009-11■ Aker Oilfield Servicesvessels capexprogramme through 2011(please see next page)Subsea P&T ED&S P&C OtherNote: ¹Maintenance capex included in chartCapital Markets Day 03 December 2009 Slide 10© 2009 Aker Solutions part of Aker


Investments in Aker Oilfield Services according ong>toong> planSkandi Sanong>toong>s(AKOFS 716)■ Chartered from DOF■ Capex ong>toong>pside NOK 400M■ On contract with Petrobras from Q1 2010Skandi Aker(AKOFS 705)Skandi -(AKOFS 718)■ Chartered from DOF■ Option ong>toong> buy in 2015■ Capex ong>toong>pside NOK ~1.2B■ Capex subsea equipment NOK ~500M■ Vessel ready Q1 2010, subsea equipment Q42010■ Owned by Aker Oilfield Services, capex NOK~1.2B■ Planned capex ong>toong>pside NOK ~1B■ Planned capex subsea equipment NOK ~300M■ Vessel ready Q4 2010, ready for wellintervention H1 2011Year: 2009 2010 2011Total capex: ~1.5B ~2.0B ~0.8BNote: NOK ~400M of AKOFS capex programme already invested upon acquisition of AKOFSCapital Markets Day 03 December 2009 Slide 11© 2009 Aker Solutions part of AkerComfortable liquidity and no debt ong>toong> refinance(NOK million)10 0008 0006 0004 0002 0003.6B0.6B3.2B■■Available funds ong>toong> finance ourinvestment programmeNo material debt ong>toong> refinanceuntil end 20120-2 000-4 000-6 0008.7B4.9B■Dividend policy remains stable;30-50% of net profits-8 000-10 000Q3 08 Q4 08 Q1 09 Q2 09 Q3 09Undrawn credit facilitiesInterest bearing assetsCashGross debtNet interest bearing debt-Capital Markets Day 03 December 2009 Slide 12© 2009 Aker Solutions part of Aker


Order backlog with lower risk; approximately NOK 30Bong>toong> be executed 2010Order backlogNOK billion60406040Order backlog57B201220112020201020090Q108 Q208 Q308 Q408 Q109 Q209 Q3090Execution yearSubsea P&T ED&S P&C■ Excluding growth in existing projects■ Excluding some service projectsCapital Markets Day 03 December 2009 Slide 13© 2009 Aker Solutions part of AkerMore “lower risk” contract formats in our projectbusiness than in previous yearsIllustrativeField development project exampleSubsea product system exampleProject management EngineeringLumpTargetConstruction summechanism(reimb.)Measurement(normsbased)Cost plus(reimbursable)ManufacturingLumpsumSystem engineering &Project managementLumpsumLump sumProcurementPurchasingCapital Markets Day 03 December 2009 Slide 14© 2009 Aker Solutions part of Aker


Flexible cost baseField development project exampleShare of ong>toong>tal cost baseShare of ong>toong>tal cost baseIllustrativeSubsea product system example100%80604020Internal ExternalExternalExternalInternalInternal Ext.100%80604020InternalExternalExternalInternalInternal0EngineeringProcurementConstructionProjectmgmt.0EngineeringInternalPurchasingManufacturing Projectmgmt.■Aker Solutions cost structure:● ~60% external cost base – fluctuates with business load● ~40% internal cost base – of which indirect costs reduced by NOK 1B 2009Capital Markets Day 03 December 2009 Slide 15© 2009 Aker Solutions part of AkerThree main types of currency effectsHedging effects Translation effects Currency composition■■■All currencyexposure from allcontracts hedgedAround 20% ofhedges do notqualify for hedgeaccounting (IFRS)Non-qualifyinghedges cause profitfluctuations,however have noP&L effect in thelong run as theyzero each other out■■Translation effectsmainly from UK andUS subsidiariesNet profit sensitiveong>toong> NOK, USD andGBP fluctuations■ 10% USD/NOKincrease =NOK ~70 millionEBITDA increase■ 10% GBP/NOKincrease =NOK ~50 millionEBITDA increaseShare of ong>toong>tal100 %OtherEUR80 %GBP60 %USD40 %20 %NOK0 %RevenuesOtherEURGBPUSDNOKCostsCapital Markets Day 03 December 2009 Slide 16© 2009 Aker Solutions part of Aker


Concluding remarksAkerSolutions■■■■Around NOK 30B of revenues secured in backlog for 2010 (as of Sep.), approx.NOK 4B less than one year agoReduced order intake 2009 will impact 2010 activity level in Subsea, P&T and P&CService business continues ong>toong> growAnnual capex level of NOK 1.2-1.5B next two years, plus investments in AKOFSED&S■■■Capitalising on solid North Sea MMO marketTargeted international expansion in harsh environments and deep watersExpecting more stable results going forwardP&C■ Revenue level 2010 negatively impacted by low 2009 order intake■ Growth in higher-margin Metals & Mining and Energy & Environment■ Capacity adjustments expected completed year-end 2009Subsea■ Challenging near-term ong>toong>p-line, however more active market■ Growth in life cycle services■ Aker Oilfield Services expected ong>toong> ong>deliverong> positive results 2011P&T■■■Healthy order backlog, however price pressure in new-build marketGrowing installed base yields attractive service growth potentialPositioned ong>toong> address Brazilian marketCapital Markets Day 03 December 2009 Slide 17© 2009 Aker Solutions part of AkerCapital Markets Day 03 December 2009 Slide 18© 2009 Aker Solutions part of Aker


Copyright & disclaimerCopyright of all published material including phoong>toong>graphs, drawings and images in this document remains vested inAker Solutions and third party contribuong>toong>rs as appropriate. Accordingly, neither the whole nor any part of this documentshall be reproduced in any form nor used in any manner without express prior permission and applicableacknowledgements. No trademark, copyright or other notice shall be altered or removed from any reproduction.This Presentation includes and is based, inter alia, on forward-looking information and statements that are subject ong>toong>risks and uncertainties that could cause actual results ong>toong> differ. These statements and this Presentation are based oncurrent expectations, estimates and projections about global economic conditions, the economic conditions of theregions and industries that are major markets for Aker Solutions ASA and Aker Solutions ASA’s (including subsidiariesand affiliates) lines of business. These expectations, estimates and projections are generally identifiable by statementscontaining words such as “expects”, “believes”, “estimates” or similar expressions. Important facong>toong>rs that could causeactual results ong>toong> differ materially from those expectations include, among others, economic and market conditions inthe geographic areas and industries that are or will be major markets for Aker Solutions’ businesses, oil prices, marketacceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currencyexchange rates and such other facong>toong>rs as may be discussed from time ong>toong> time in the Presentation. Although AkerSolutions ASA believes that its expectations and the Presentation are based upon reasonable assumptions, it can giveno assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation.Aker Solutions ASA is making no representation or warranty, expressed or implied, as ong>toong> the accuracy, reliability orcompleteness of the Presentation, and neither Aker Solutions ASA nor any of its direcong>toong>rs, officers or employees willhave any liability ong>toong> you or any other persons resulting from your use.Aker Solutions consists of many legally independent entities, constituting their own separate identities. Aker Solutionsis used as the common brand or trade mark for most of these entities. In this presentation we may sometimes use“Aker Solutions”, “we” or “us” when we refer ong>toong> Aker Solutions companies in general or where no useful purpose isserved by identifying any particular Aker Solutions company.Capital Markets Day 03 December 2009 Slide 19© 2009 Aker Solutions part of Aker

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