Aker Solutions Asa · OSL:AKSO
Aker Solutions Asa — Aker Kværner — Investor Day (November 2007)
65 slides from Aker Solutions Asa's investor day presentation, Nov 30, 2007
Slide 1: Capital Markets Day
Aker Kværner ASA Capital Markets Day 30 November 2007 part of the Aker group
Slide 2: Agenda and Disclaimer
Agenda Time Presentation Speaker 0800 Registration and coffee 0830 Welcome and practical details Lasse Torkildsen 0835 The Preferred Partner Martinus Brandal 0900 Financial Excellence – Profitable growth Bjørn Erik Næss 0925 Q&A 0935 Capitalising on growth markets Jarle Tautra 1035 Coffee break 1050
Slide 3: The Preferred Partner / Aker Kvaerner in brief
The Preferred Partner Martinus Brandal, President & CEO Capital Markets Day 30 November 2007 part of the Aker group Aker Kvaerner in brief Company overview Revenues/EBITDA¹ Process & ■ A leading global provider of Construction Field Development engineering and construction, technology products, exec
Slide 4: Health, Safety and Environment
Health, Safety and Environment ■ Continued reduction in lost time injuries ■ Total recordable injuries and sick leave leveling out ■ 1 300 leaders through the HSE leadership programme ■ 25 000 HSE eLearning sessions executed Lost Time Injuries 1 Total Recordable Injuries 1 Sick Leave 2 3 per million
Slide 5: Good global spread of projects won in 2007
Good global spread of projects won in 2007 Mooring for Gjøa, Morvin Subsea, StatoilHydro, Statoil, ~NOK 90M Floater installation Wind mills, Multibrid ~NOK 1000M contract, Sevan, Entwicklungsgesellschaft Umbilical Vega& Troll, M&M services NCS, ~NOK 145M Bow loading systems Statoil, ~NOK 434M FEED f
Slide 6: Long-term strategic ownership in Aker Kvaerner
Long-term strategic ownership in Aker Kvaerner 30% 60% 7.5% 2.5% Aker Holding 40.27% part of the Aker group Slide 7 © 2007 Aker Kvaerner Underlying market continues to be positive World Primary Oil Demand Global Energy Situation mmb/d 140 120 120 Global demand OPEC spare 100 100 production capacity
Slide 7: Huge energy demands in China
Huge energy demands in China (%) ■ World’s 2nd largest energy consumer ■ China consumed 13% of world energy 2006 ■ China to consume 23% of world energy 2020 part of the Aker group Slide 9 © 2007 Aker Kvaerner Shift towards deepwater developments Global Offshore CAPEX Global Deepwater CAPEX $ billion
Slide 8: Profitable growth towards 2010
Profitable growth towards 2010 ■ Strong energy demand continues ■ Market leader in selected segments ■ Active use of technology to differentiate ■ Operational improvement program ■ Increased focus on acquisitions ■ Focus on value added selling ■ Increase installed base and grow service business Annu
Slide 9: Sound age profile and stable turnover
Sound age profile and stable turnover Age profile Employee turnover (own employees) 12,00 % < 30 60+ years 10,00 % (17%) (6%) 8,00 % 51-60 (20%) 31-40 (28%) 6,00 % 41-50 (29%) 4,00 % 2,00 % Average age = ~42 years 0,00 % 2005 2006 2007E part of the Aker group Slide 13 © 2007 Aker Kvaerner Global Oil
Slide 10: A world of opportunities, selecting the right one!
A world of opportunities, selecting the right one! Photo: First people part of the Aker group Slide 15 © 2007 Aker Kvaerner Technology management part of the Aker group Slide 16 © 2007 Aker Kvaerner
Slide 11: Bringing our experience to new Arctic frontiers
Bringing our experience to new Arctic frontiers Snøhvit, Photo: Allan Klo Ormen Lange, Photo: Øivind Leren part of the Aker group Slide 17 © 2007 Aker Kvaerner From cost plus to value added selling Light well intervention Well Services part of the Aker group Slide 18 © 2007 Aker Kvaerner
Slide 12: Building stronger service businesses
Building stronger service businesses Technology based MMO type service After sales service service ■ New markets ■ New markets ■ New solutions/ ■ New customers ■ Pro-activeness applications ■ New markets ■ New service concepts ■ New service concepts ■ New customers part of the Aker group Slide 19 ©
Slide 13: Summary
Summary ■ 2007 is expected to be another strong year ■ Markets continue to be positive ■ Profitable growth towards 2010: ● Market leader in selected segments ● Active use of technology to differentiate ● Operational improvement program ● Increased focus on acquisitions ● Focus on value added selling
Slide 14: Financial excellence – Profitable Growth to continue
Financial excellence – Profitable Growth to continue Bjørn Erik Næss, EVP & CFO Capital Markets Day 30 November 2007 part of the Aker group Aker Kvaerner continues to perform – Shareholder value increased 21% L12M Share value (indexed, IPO=100) Share price L12M change change 800 2004-05 2006 2007 (s
Slide 15: Value creation since IPO
NOK 42.5 billion total shareholder value creation since IPO Value creation since IPO 42.5B NOK 50B 46.6B -2.5B -0.6B 40 30 20 10 7.2B 0 IPO Value Dividend Share Current value growth buy-back value¹ Note: Based on share price 23 Nov 07; ¹Excluding treasury shares part of the Aker group Slide 3 © 2007
Slide 16: Strong profitable growth – EBITDA up 31% and EPS up 48%
Strong profitable growth – EBITDA up 31% and EPS up 48% Operating revenues EBITDA EPS (12-month rolling) (12-month rolling) (YTD) +24% +31% +48% NOK 4,000M NOK 60B 58.4B NOK 8 3,632M NOK 6.60 47.2B 6 2,765M 40 NOK 4.47 2,000 4 20 2 0 0 0 Q405-Q306 Q406-Q307 Q405-Q306 Q406-Q307 2006 2007 (YTD) (YTD)
Slide 17: Strong operating cash flow since 2004
Strong operating cash flow since 2004 mainly used for refinancing and dividend/share buy-back Cash situation (NOK M) 979 12,500M 8,539 -925 10,000 7,500 -4,169 -892 5,000 -912 2,899 2,500 2,218 -3,162 -139 0 Cash EBITDA WC Net Loan Financing Tax Dividend/ Other Cash Q3 change Capex repay- (interest
Slide 18: Stable high quality order backlog
Building for the future – Stable high quality order backlog Order backlog (NOK million) 70000 60000 50000 Field Development 40000 MMO Subsea 30000 Products & Technologies Process & Construction 20000 10000 0 3Q 06 4Q 06 1Q 07 2Q 07 3Q 07 part of the Aker group Slide 9 © 2007 Aker Kvaerner NOK 1 bill
Slide 19: Three key elements of Improvement Programme
Three key elements of Improvement Programme Supply management Risk to profit Process Improvement ■ Commodity-based ■ Increase focus on Aker ■ Key processes to be organisation across Kvaerner project improved: business areas execution model principles (PEM) in ● “Hours to pay” tender activities ● Ven
Slide 20: EBITDA margin target 9-11% by 2010
Aker Kvaerner target to deliver an EBITDA margin in the range of 9-11% by 2010 EBITDA margin Key assumptions 9-11% 10% ■ Continued strong markets driving profitable growth 8 ■ Subsea and P&T to 6.5-7.0% deliver double-digit 6 5.7% margins 4.9% ■ FD, MMO and P&C to deliver high single-digit 4 margins
Slide 21: Capitalising on growth markets
Capitalising on growth markets Jarle Tautra, EVP Process & Construction Capital Markets Day 30 November 2007 part of the Aker group Process & Construction in brief ■ Leading global supplier of management, design and construction services for major projects spanning ● Metals and mining ● Chemicals, p
Slide 22: Profitable growth and substantial cash generation
Global business – 4 400 own employees – 10 800 including temporary flexible resources Construction Process 500 own employees 3 200 own employees 4 100 temporary employees 1 500 temporary employees Zoetermeer Shanghai Houston Global integration: Mumbai Global Key Accounts Construction and Project Man
Slide 23: Selected P&C project wins 2007
Selected P&C project wins 2007 Halton Hills Bioethanol project Decommissioning Sludge treatment facility Generating Station BP/ABF/DuPont Sellafield Northumbrian Water Canada United Kingdom British Nuclear Group, UK United Kingdom Decommissioning Hunterston ‘A’ Longview Power Plant Magnox Electric,
Slide 24: Metals: Key offering and products
part of the Aker group © 2007 Aker Kvaerner San Cristobal – Apex, Bolivia Metals: Key offering and products ■ Full-range, life-cycle services to global BHP Spence Copper, Chile mining and minerals companies on a reimbursable cost-plus basis (EPCM) ■ Main focus on Americas and Australia ■ Reimbursabl
Slide 25: High metals demand driven by global GDP growth
Metals High metals demand driven by global GDP growth Copper consumption 2000 – 2010 Annual Market drivers ‘000 tonnes (management forecast) growth ’06-’10: ■ Demand for metals driven by global GDP 18 000 3% growth: 16 000 Japan -2% 13 900 Japan ● Copper: China main driver Japan 8% China China China
Slide 26: Aker Kvaerner operations aligned to worldwide ores
Metals Aker Kvaerner Metals competence profile aligned to future Mining Business Opportunities BNOK Investment Mining Projects 2007-2010 700 161 630 600 500 38 100 400 146 300 200 184 100 0 Copper Gold Nickel Lead/Zinc Others Total Leader Competitive Leader Competitive Source: Raw Materials Group, M
Slide 27: Metals strategy: Semi-organic growth
Metals strategy: Semi-organic growth in Metals current and new geographical areas Expand in Europe to serve Strong presence, future market in eastern Europe positioned for future Organic growth of growth in China existing offices Flexible cost base through Mumbai engineering Expand into Africa South
Slide 28: Large, growing US construction market
Construction Large, growing US construction market US construction Market (NOK B) LNG regas (Management estimates) Metals constr- uction Re- fining Power Note: Market size defined as TIC (Total Installed Cost) value of projects; Market size and competitive position based on estimates and management
Slide 29: Construction covering key regions
Construction Construction covering key regions Relevant market per region (Management estimates) Mid West Chicago Burlington South West ~25B NOK Pittsburgh Tucson ~12B NOK Houston North-East Power Gulf coast Metals Refining LNG ~28B NOK ~34B NOK part of the Aker group Slide 17 © 2007 Aker Kvaerner N
Slide 30: Nuclear: Emerging Market – Nuclear New Build
Nuclear: Emerging Market – Nuclear New Build Worldwide nuclear new builds: Unique system offering: Large potential market Radwaste plants (units) 250 223 200 150 100 86 50 34 0 Under Planned Proposed Construction ■ Built Radwaste plant for only Examples: UK Pressurised Water Reactor China: 5 30 84 ■
Slide 31: Process & Construction summary
Process & Construction summary Process: ■ Technology strategy – leverage Europe and US ■ Selective EPC Strong presence, Construction: ■ Grow China and India positioned for future ■ Capitalise on strong businesses growth in China Energy and Metals markets ■ Cautious organic growth ■ Improve margins F
Slide 32: Leveraging know-how, products and technologies in key markets
Leveraging know-how, products and technologies in key markets globally Pål Helsing, EVP Field Development Capital Markets Day 30 November 2007 part of the Aker group Field Development in brief ■ Field Development focuses on EPC total deliveries in a few selected business segments ■ The aim is to hav
Slide 33: Where we are located / Major project achievements
Where we are located Fabrication • Verdal • Stord Engineering/Technology • Egersund Oslo Representation office Moscow Fabrication Astrakhan Engineering/Technology Houston Front-end engineering Kuala Lumpur Front-end engineering Engineering/Technology Perth Fabrication part of the Aker group Slide 3
Slide 34: Major project achievements (cont.)
Major project achievements (cont.) Aker H-6e Gjøa Blind Faith ■ Building the world’s ■ Delivering the Gjøa ■ Delivering Chevron’s biggest drilling rigs gas production semi Blind Faith platform ■ The hull and topsides in the North Sea hull in Gulf of Mexico for the first rig, Aker ■ Major procurement
Slide 35: Responding to the international growth opportunity
Responding to the international growth opportunity Leverage the intersection between key competences, products/technology and growing markets to build new international growth platforms Target Markets Key in-house technologies Key competences and know-how and products • Project execution • Semi desi
Slide 36: Global market outlook
Global market outlook excluding onshore Field development capex offshore 2008-2011 (USD million) 18 000 15 000 12 000 Eng & Mmt 9 000 Floating platforms 6 000 Fixed 3 000 platforms 0 India Other Kazakhstan Nigeria Angola Australia Malaysia Mexico China Russia Brazil US GoM UKCS Norway Primary market
Slide 37: Maintaining the leading position in the North Sea
Maintaining the leading position in the North Sea Redeveloping the North Sea New frontiers in the North Building on the No 1 position New field developments Large redevelopment projects Expansion of phased projects Modification for CO2 capture New Arctic rigs considered FPSO SEMO¹ SEMI Typical onsho
Slide 38: Northwest Russia and Sakhalin
Northwest Russia and Sakhalin Shtokman Yamal area Sakhalin 1 3.8 tcm gas 10.4 tcm gas, 2.3 bn bls oil 37 mill t cond. 228 mill tonn cond. 0,5 tcm gas part of the Aker group Slide 13 © 2007 Aker Kvaerner Focus on deepwater floaters in Gulf of Mexico Blind Faith delivered 20 floaters planned 2008-12 S
Slide 39: Develop the emerging gas value chain in Asia Pacific
Develop the emerging gas value chain in Asia Pacific Floating production systems Receiving terminals and LNG Growing market Large Australian market Breakthrough on Ichtys Concrete “island” technology Illustration of the Ichtys semi part of the Aker group Slide 15 © 2007 Aker Kvaerner TM Just Catch C
Slide 40: Summary
Summary ■ Field development is delivering several major projects ■ Over the last years, a large part of the revenue has come from a few large projects ■ We will increase our international focus securing continued growth ■ Primary markets will be where we can leverage our know-how, products and techn
Slide 41: Positioned for the modifications boom
Positioned for the modifications boom Torleif Gram, EVP MMO Capital Markets Day 30 November 2007 part of the Aker group MMO in brief St John’s Kazhakstan Houston Egypt ■ MMO is providing cost-effective solutions for maintenance, modifications, operations and decommissioning in the North Sea and in s
Slide 42: Stable long term business
Stable long term business – Select, deliver value, get paid for added value Operate, maintain Remove and Design and deliver and improve deconstruct Revenue 1 CAPEX potential Opex: Up to 3-5 CAPEX ~0.5 CAPEX 0.5 - 4 years -> 40 years 0.5-5 years ■ Execution capabilities ■ Service installed base ■ Saf
Slide 43: Operational achievements in 2007
Operational achievements in 2007 Statfjord Late Life (Source: Statoil) ■ Strong position in the Norwegian market (~50 % market share) ● Profit improvement ● Net number of employees increased by 300 ● Statfjord Late Life ready for gas export ● Delivered EIT1) on Snøhvit and Ormen Lange ● Completion o
Slide 44: Booming modifications market
Booming modifications market Norwegian modifications market development (NOK billion) 25 20 15 10 5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Rystad Energy part of the Aker group Slide 7 © 2007 Aker Kvaerner Statfjord B Late Life Black start topping Up air compressor Black start air Com
Slide 45: People is the key
People is the key ■ Attractive employer ■ Investing in flexible cost and resource base ■ Retaining present employees ■ Investing in new office facilities part of the Aker group Slide 9 © 2007 Aker Kvaerner Broad offshore decommissioning experience ■ Odin 1995 ■ Maureen 1999-2003 ■ Brent flare 2005 ■
Slide 46: The MMO role in the decommissioning market
Buoyancy tank jacket removal system part of the Aker group Slide 11 © 2007 Aker Kvaerner The MMO role in the decommissioning market ■ Market development 100% Denmark 4% Others 1% ● NOK 200 billion North Sea market Netherland 7% ● New technology and high oil price 80 will extend field life and postpo
Slide 47: Summary
Summary ■ Maintain our strong market position ■ Improve profitability ■ Sound balance between our services ■ Strongly growing modifications market We are well positioned for the booming modifications market part of the Aker group Slide 13 © 2007 Aker Kvaerner
Slide 48: Expanding the Technology Portfolio
Expanding the Technology Portfolio Mads Andersen, EVP Products & Technologies Capital Markets Day 30 November 2007 part of the Aker group Products & Technologies in brief ■ The Products & Technologies business area offer specialised products and services to the upstream oil and gas industry ■ Delive
Slide 49: Technology achievements 2007
Technology achievements 2007 Market leader in environ- CEC™ process technology mentally safe crude loading commercialised technology for Arctic Awarded OTC Spotlight on conditions New Technology award for PowerTrac® Cone Crusher “BOA SUB C” now in operation Break-through in the on the “Blind Faith”
Slide 50: Near term growth driven by three key markets
Near term growth driven by three key markets Deepwater drilling ■ Drilling equipment and systems ■ Mooring systems Floating production ■ Mooring and offloading equipment ■ Upstream process technologies ■ Floater¹ installation and Subsea construction² Increased Oil Recovery ■ Well intervention ■ Proc
Slide 51: Another 60-80 new builds may be ordered towards 2015
Another 60-80 new builds may be ordered towards 2015 30 Estimated newbuilds* Drilling floaters by delivery year 25 Delivered or under construction** 20 15 10 5 0 '72 '73 '74 '75 '76 '77 '78 '79 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '0
Slide 52: Drilling equipment projects on track
All drilling equipment projects still on track: At equipment delivery peak, well into commissioning phase Rig 2006 2007 2008 2009 2010 Rig name Owner Yard Type Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Mærsk JU1 Mærsk Keppel Fels Jack-ups Mærsk JU2 Mærsk Keppel Fels Mærsk JU3 Mærsk Ke
Slide 53: Acquisition of Wirth completes drilling product portfolio
Increasing own added value through technology expansion Drilling equipment Technology achievements Top drive/rotating 9 equipment ■ Prototyping the next Pipe handling 9 generation derrick drilling Control system 9 machine (MDDM™1) Derrick, travelling ■ Successful launch of 9 equipment TorqueMaster™
Slide 54: Drilling simulator and installed base growth
Aker Kvaerner has developed a drilling simulator for realistic training of drilling operators ■ Aker Kvaerner supplying complete drilling packages to ~25 rigs ■ Requires 1 500-1 700 drilling operators with significant training ■ With First Interactive, Aker Kvaerner developed drilling simulator ● 3D
Slide 55: Floating production units under construction
Some hundred floating production units are currently under construction, potential for more Installed base of Floating production 450 Semis 400 TLP Spar 350 FPSO 300 250 200 150 100 50 0 Installed base Installed base Installed base Under Bidding phase Long term Total 2015 1987 1997 2007 construction
Slide 56: Strong position in attractive niches
Strong position in attractive niches Mooring and loading Process equipment Installation equipment ■ Market leader for ■ Top side upstream ■ Charter of “Boa Sub C” advanced offshore process modules for and “Boa Deep C” – two loading equipment FPSOs superior vessels! ■ Significant experience ■ Cutting
Slide 57: Subsea opportunities in umbilical, riser and aftermarket segments
Subsea opportunities in umbilical, riser and aftermarket segments Raymond Carlsen, EVP Subsea Capital Markets Day 30 November 2007 part of the Aker group Subsea in brief ■ Aker Kvaerner’s global subsea business with approximately 4 800 employees in 23 locations ■ Full lifecycle service provider and
Slide 58: Competitive edge
Competitive edge ■ Aker Kvaerner is the only company in the world that can manufacture and deliver a complete subsea production system, including umbilicals ■ We offer stand-alone products in addition to EPC capabilities ■ Unique deepwater technology and expertise for both umbilicals and risers ■ Ak
Slide 59: Steel tube umbilicals market
Steel tube umbilicals ~2/3 of total umbilical market 2007-11 Market development 2000-2011 (km umbilical by year of award) 4000 3500 3000 2500 2000 1500 1000 500 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Steel Thermoplastic Source: Quest Offshore part of the Aker group Slide 5 © 2
Slide 60: Market share
Aker Kvaerner is the leading steel tube umbilical manufacturer globally Steel tube umbilical market shares by region Global STU market shares (Awards 2005-Q3 2007) (2005-Q3 2007) Total km: 385 565 1 285 522 107 Total 2 561 km 100 % 1% 90 % 11 % 80 % Market share 70 % 12 % 60 % 41 % 50 % 40 % 30 % 16
Slide 61: A complete riser system provider
Aker Kvaerner: A complete riser system provider ■ Leading market position ■ Strong market outlook ■ Unique CLIP Connector system ■ New system components developed to cover all deepwater needs ■ Increased production capacity Global market share by km NOV (to be built 2008-2011) Cameron 15-20% 35-40%
Slide 62: Ready to capitalise on deepwater market growth
Ready to capitalise on deepwater market growth ■ New riser manufacturing facility in Malaysia ■ Operational from January 2007 ■ Workshop area 4 700 m2 ■ “One stop shop” for drilling riser systems ■ Ideally located in main growth region The riser manufacturing facility in Malaysia part of the Aker gr
Slide 63: Aftermarket support and new service offering
Traditional aftermarket support ■ Installation support to operators ■ Tools for installation and maintenance ■ Service bases around the world providing: ● Preparation of subsea equipment ● Storage of equipment ● Storage of tools ● Offshore maintenance of tools and equipment ■ Personnel ■ Service and
Slide 64: Future aftermarket support
Future aftermarket support ■ Opportunity for light well interventions ● Growing need ● Rig rates high, availability low ● Significant reduction in cost when using vessel ■ Greater demand to lift tail-end production (IOR) ● Processing & boosting technologies will lift Need for subsea well workover op
Slide 65: Summary
Summary ■ Umbilical and riser ● Significant market growth opportunities ● Aker Kvaerner well positioned ● A competitive advantage compared with main peers ■ Aftermarket Multibooster subsea pump for BP’s King project ● Maintain focus on growing aftermarket business ● Will concentrate on increasing se