Stolt Offshore reports year end resultsNews // March 14, 2003
The net loss for the latest quarter was $139.7 million or $1.65 per share, which includes write-offs totaling $115.4 million in respect of the impairment of goodwill and fixed assets, on net operating revenue of $441.1 million. The loss excluding these one-off items was $24.3 million or $0.29 per share. This compares with a net loss in the prior period of $2.0 million or $0.02 per share before the charge of $7.9 million relating to the impairment of the Comex trade name. The net loss, including this impairment charge, for the prior period was $9.9 million or $0.11 per share on net operating revenue of $417.3 million.
The fourth quarter impairment charge includes $106.4 million in respect of goodwill, of which $103.0 million relates to the 1998 acquisition of Ceanic, in the North America region. In addition, we recorded an impairment charge of $9.0 million in respectof certain tangible fixed assets, which includes our share of an impairment charge recorded by the NKT Flexibles joint venture.
The weighted-average number of common share equivalents outstanding for the quarter was 84.7 million, compared with 87.2 million for the same period of 2001.
The net loss for the year ended November 30, 2002 was $151.9 million, or $1.79 per share, after an impairment charge of $115.4 million, offset by an $8.0 million gain on the disposal of Big Inch Marine Systems reported earlier in the year, on net operating revenue of $1.4 billion. The loss excluding these items was $44.5 million, or $0.52 per share. This compares with a net loss of $6.3 million, or $0.07 per share before the intangible charge, and $14.2 million or $0.16 per share after the intangible charge, on net operating revenue of $1.3 billion for the same period in 2001. The weighted-average number of common share equivalents outstanding for fiscal 2002 was 85.0 million compared with 87.2 million for the same period of 2001.
Commenting on the results, Niels G Stolt-Nielsen, Interim Chief Executive Officer, said: "During the quarter we wrote off goodwill on earlier acquisitions and finished the year with a net loss, excluding non-recurring items, of $44.5 million, which is close to our earlier guidance. Clearly this result is very disappointing, and reflects the negative outcome of several EPIC contracts. However, we strongly believe that the actions we have taken to strengthen the tendering and execution of EPIC contracts will, in due course, resolve the root causes of these project difficulties. Further, we renegotiated and finalised the covenants on our two major credit facilities and, as recently announced, we have hired a new CEO and CFO."
"The Board approved the write off of $106.4 million of goodwill in relation to the Ceanic acquisition and other items. In particular, the decision on the impairment of the Ceanic goodwill was taken because of continuing disappointing results in the NorthAmerica Region since this acquisition. These goodwill impairments are non-cash accounting items and as such they have no impact on our debt covenants. The only remaining goodwill of $6.0 million relates to the acquisition of the Paragon companies, whichcontinue to achieve good results."
He continued: "During the quarter in West Africa we progressed the pipelay on the Offshore Gas Gathering System for Shell in Nigeria. We continued to experience difficulties with local logistics on this project however the main pipelay programme from theLB200 is now complete. We started the fabrication phase of the Shell Forcados Yokri project. We progressed the design engineering phase of the ChevronTexaco Sanha Condensate project, which is now 80 per cent complete and we progressed the procurement and fabrication aspects of this project. We completed the Marathon Tchatamba project in Gabon."
"In Angola we mobilised for the second phase of the Girassol project where all of the subsea pipe bundles are now in place. The Seaway Polaris has installed the manifolds and is now laying the last two flowlines. The tie-in programme using the MATIS system is progressing. In the Mediterranean, we progressed the Scarab and Saffron project. Most of the subsea installation work is now complete. The commissioning process has now started with first gas anticipated shortly," he explained.
"In the UK, the BP Mirren and Madoes project was completed ahead of schedule to the considerable satisfaction of our customer. The main pipeline scope of work on the Conoco CMS project was completed to meet the first gas target date and the first phase of the ATP Helvellyn platform tie-in was successfully completed."
"In Norway the design, procurement and subcontract work commenced on the Norsk Hydro Vigdis Extension and TotalFinaElf Skirne Byggve projects. Engineering work commenced on the Lyse Røgass project requiring the installation of 46km of gas pipeline in upto 580m of water between Kårstø and Risavika. In Gulf of Mexico work commenced on the Duke Energy Hubline pipelay project in Boston Harbour where the main trunkline has been laid by the DLB 801. Our shallow water fleet in the Gulf was occupied with inspection and repair work following the arrival of Hurricane Lili in October. Three umbilical lay projects were awarded for the Seaway Falcon. These are on the Shell Princess and Mensa fields and the Pinnacle Energy Mississippi Canyon 837 field. These projects are now completed. The activity level in this region for both shallow and deepwater work remains low."
"In Brazil the two long term contracts for Petrobras continued to perform well. In Asia Pacific we progressed Phase 8 of the TotalFinaElf Tunu pipelay project and commenced the shallow water pipelay for Tunu Phase 9 which is now completed."
"Our backlog now stands at $1.6 billion of which $1.1 billion is for 2003," explained Mr Stolt-Nielsen. This compares with a backlog of $1.6 billion at this time last year of which $930 million was for 2002. We expect the utilisation for the deepwater and heavy construction fleet for 2003 to be similar to 2002 at 80 per cent. The outlook for large diameter pipelay is however weaker than last year. We expect lower utilisation for the LB200 pipelay barge for which we have just eleven weeks of work bookedto date compared to six months work at this time last year. The level of bids outstanding is now $4.3 billion compared to $3.0 billion at this time last year.
"In the last four months we have strengthened our project management organisation and further improved our project control and supply chain management functions. It will take most of 2003 to work through the loss making and low margin contracts. Our global market expected to grow from $9 billion in 2002 to $16 billion in 2004. We are now starting to move in the right direction. We do not intend however, at this stage, to give guidance on our anticipated earnings for this year." Mr Stolt-Nielsen concluded.