Saipem S.p.a. · MIL:SPM

Saipem — FY2017 Earnings Presentation

54 slides from Saipem's earnings presentation, Mar 6, 2018

  1. Slide 1: 2017 Results and Strategy Update Presentation

    2017 RESULTS AND STRATEGY UPDATE PRESENTATION 6 March 2018

  2. Slide 2: Forward-Looking Statements

    FORWARD-LOOKING STATEMENTS Forward-looking statements contained in this presentation regrading future events and future results are based on current expectations, estimates, forecasts and projections about the industries in which Saipem S.p.A. (the “Company”) operates, as well as the beliefs and ass

  3. Slide 3: Today's Presentation

    TODAY’S PRESENTATION 1 OPENING REMARKS 2 FY2017 RESULTS 3 GROUP STRATEGY UPDATE AND BACKLOG 4 DIVISIONS 5 CLOSING REMARKS AND 2018 GUIDANCE 3

  4. Slide 4: 2017: Ready for the Future

    2017: READY FOR THE FUTURE FY 2017 performance:  E&C Offshore sound margins underpinned by cornerstone projects • Volumes softening in 4Q17 mainly due to shift of activities to 2018  E&C Onshore profitability recovery on track, excluding LPG arbitration  Drilling Offshore resilient margins backed

  5. Slide 5: FY 2017 Results

    ™=_y SAIPEM ENGINEERING Bon ENERGY FY 2017 RESULTS

  6. Slide 6: Consob resolution on 2016 financial statements

    As disclosed to the market by Saipem with a press release dated March 5, 2018 (available on the Company's website in the "Media - Press Release" section), Consob declared with resolution no. 20324 of 2 March 2018 (the "Resolution") the "non- compliance of Saipem's 2016 consolidated and statutory fin

  7. Slide 7: FY 2017 Results

    FY 2017 RESULTS YoY COMPARISON (€ mn) Revenues Adjusted EBITDA Adjusted Net Result 12.7% margin 10.7% 9,976 8,999 1,266 964 226 46 FY16 FY17 FY16 FY17 FY16 FY17 7

  8. Slide 8: FY 2017 Results – E&C

    FY 2017 RESULTS – E&C YoY COMPARISON (€ mn) E&C OFFSHORE E&C ONSHORE Revenues Adj. EBITDA Revenues Adj. EBITDA 4,652 15.4% margin 15.0% (1.2%) margin (0.5%) 4,204 3,878 3,692 674 1023 (47) 717 (21) 43 555 10 (31) 3530 2855 (90) FY16 FY17 FY16 FY17 FY16 FY17 FY16 FY17 E&C Onshore Floaters* Highlights

  9. Slide 9: FY 2017 Results – Drilling

    FY 2017 RESULTS – Drilling YoY COMPARISON (€ mn) DRILLING OFFSHORE DRILLING ONSHORE Revenues Adj. EBITDA Revenues Adj. EBITDA 50.3% margin 52.4% 26.2% margin 22.2% 903 543 490 613 454 142 321 109 FY16 FY17 FY16 FY17 FY16 FY17 FY16 FY17 Highlights Highlights • Rig idleness affecting volumes • Continu

  10. Slide 10: FY 2017 Net Result Reconciliation Between Adjusted and Reported

    FY 2017 NET RESULT RECONCILIATION BETWEEN ADJUSTED AND REPORTED (€ mn) Net Result 46 (43) (79) (252) (328) FY17 Net provisions for Tax settlement Assets FY17 Adjusted redundancies write-downs Reported SPECIAL ITEMS 10

  11. Slide 11: FY 2017 Results – From Adjusted EBITDA to Net Result

    FY 2017 RESULTS - FROM EBITDA Adjusted TO NET RESULT D&A 684 € mn 524 FY2016 FY2017 D&A 220 178133 197196 122 89 73 (*) Floaters business included in E&C Onshore, FY 2016 Offshore Onshore E&C E&C Total restated accordingly Drilling Drilling Onshore* Offshore D&A 223 2017 € mn 59 39 FINANCE CHARGES 1

  12. Slide 12: FY 2017 Net Debt Evolution

    FY 2017 NET DEBT EVOLUTION (€ bn) Net Debt target met despite non-recurring items 1.45 (0.57) 0.34 1.30 0.26 (0.18) Net Debt Adj. Cash Flow Capex Δ Working Non-recurring Net Debt @Dec. 31, 2016 (Adj. N.P.+ D.&A.) Capital and items* @Dec. 31, 2017 Others (*) Non-recurring items include: project-relat

  13. Slide 13: Capital Structure as of December 31, 2017

    CAPITAL STRUCTURE AS OF DECEMBER 31, 2017 (€ mn) Debt maturity profile Bonds ECA Facilities Bank Facilities Other Debt 3,153 286 Undrawn ECA* Facilities (GIEK and Atradius) 1,500 Undrawn RCF* 600 585 NEW BOND 560 576 25 25 Available Cash 439 76 1,367 75 60 60 and equiv.** 147 139 62 375 75 500 500 5

  14. Slide 14: New IFRS – Impact Restricted to IFRS 16

    NEW IFRS – IMPACT RESTRICTED TO IFRS16 IFRS 15 – REVENUE RECOGNITION and IFRS 9 – FINANCIAL INSTRUMENTS FROM JANUARY 1, 2018 • No material impact IFRS 16 – LEASE ACCOUNTING FROM JANUARY 1, 2019 F E AT U R E S • Asset “Right-of-Use” in capital employed and depreciated (D&A) • Lease obligations increa

  15. Slide 15: Group Strategy Update and Backlog

    GROUP STRATEGY UPDATE AND BACKLOG

  16. Slide 16: Market Outlook

    MARKET OUTLOOK  Oil fundamentals volatile but improving  Global E&P spending flat, offshore segments still under pressure 2018 scenario  E&P Industry focused on US unconventional, gas and cash generation  Renewables providing new opportunities  Engineering activity increases in 2018, anticipati

  17. Slide 17: Delivering Our Strategy

    DELIVERING OUR STRATEGY … ANTICIPATING THE MARKET’S EVOLUTION STRATEGIC PILLARS ACHIEVED GOALS  DIVISIONALIZATION Business portfolio • FULLY ACCOUNTABLE DIVISIONS 1 refocus • FURTHER COST OPTIMIZATION • NON-CORE BUSINESSES RATIONALISATION  EARLY ENGAGEMENT THROUGH XSIGHT De-risking the business 2

  18. Slide 18: Mid/Long Term Business Focus

    MID/LONG TERM BUSINESS FOCUS • SURF • SUBSEA FACTORY • LIFE OF FIELD • PIPELINES • DECOMMISSIONING • RENEWABLES • LNG • REFINING • LNG • INFRASTRUCTURES • PIPELINES • UPSTREAM • REFINING • SURF • GAS MONETIZATION • IMR • PIPELINES • PIPELINES • SURF INFRASTRUCTURES GAS MONETIZATION • SURF • IMR • LI

  19. Slide 19: Technological Innovation

    TECHNOLOGICAL INNOVATION DRIVERS SHORT RANGE REACTIVE SOLUTIONS AND NOVEL CONCEPTS TO SECURE MEDIUM/LONG TERM COMPETITIVE EDGE SHORT TERM (DRIVEN BY PROJECTS) LONG TERM (DRIVEN BY ENERGY SCENARIO) BUSINESS Reduce cost and schedule of O&G projects Guarantee full exploitation of energy resources Diver

  20. Slide 20: Unbilled Revenues and Arbitrations/Court Disputes

    UNBILLED REVENUES AND ARBITRATIONS/COURT DISPUTES (€ bn) >0.7 0.8 0.7 >0.4 <0.3 c.0.1 Dec. 31, 2014 Dec. 31, 2015 Dec. 31, 2016 Dec. 31, 2017 Dec. 31, 2016 Dec. 31, 2017 UNBILLED REVENUES ARBITRATIONS/COURT DISPUTES*  SONATRACH FINAL SETTLEMENT ON 14 FEBRUARY, 2018  REMAINING ONGOING ARBITRATIONS/

  21. Slide 21: FFF2.0 – Optimisation Programme

    FFF2.0 – OPTIMISATION PROGRAMME NEW DIVISIONAL INITIATIVES INCREASING TARGET SAVINGS TO €150mn ADDITIONAL REDUNDANCIES INCREASING RELEASES TO C.1,250 FTE €10mn INCREMENTAL SAVINGS >1,200 c.1,250 FTE RUN RATE Achieved >1,000 100  CUMULATIVE HEADCOUNT 100 REDUCTION (FTE) 450 >900 March '18 Additional

  22. Slide 22: FY 2017 Backlog

    FY 2017 BACKLOG (€ mn) 14,219 8,999 490 1,214 613 7,143 12,363 1,241 850 3,530 931 3,310 4,616 674 256 4,396 3,692 3,148 * 1,960 1,542 5,188 4,644 Backlog FY17 FY17 Contracts Backlog @Dec. 31, 2016 Revenues Acquisition @Dec. 31, 2017 E&C Offshore E&C Onshore Drilling Offshore Drilling Onshore Floate

  23. Slide 23: Backlog by Year of Execution

    BACKLOG BY YEAR OF EXECUTION (€ mn) 6,367 428 409 2,129 2,974 3,022 538 131 291 314 208 970 1,297 2,863 792 212 966 815 2018 2019 2020+ E&C Offshore E&C Onshore Drilling Offshore Drilling Onshore Floaters* 23 (*) Floaters business reported separately

  24. Slide 24: Divisions

    ™=_y SAIPEM ENGINEERING Bon ENERGY DIVISIONS

  25. Slide 25: We Bring About Our Clients' Vision, Insightfully

    WE BRING ABOUT OUR CLIENTS’ VISION, INSIGHTFULLY  ENGAGE EPCI EXPERIENCE IN EARLY PHASE DEFINITION  DISRUPT TRADITIONAL LESS EFFICIENT PROCESSES AND SOLUTIONS  INNOVATE ALONG THE ENTIRE LIFE OF THE ASSET  EPCI COMPETENCES REASSEMBLED UNDER A NEW EFFICIENT OPERATING MODEL  TECHNOLOGIES AND SERVI

  26. Slide 26: Products and Services

    PRODUCTS AND SERVICES BALANCED PORTFOLIO OF PRODUCTS AND SERVICES: • 30 different clients • Over 50 ongoing projects Breakdown of activities by product High Tech Floater  INTEGRATE TECHNOLOGY INNOVATION WITH PROCESS KNOW HOW Offshore Full Field Development  LEVERAGE ON XDIM™ COLLABORATIVE Upstream

  27. Slide 27: Divisions

    ™=_y SAIPEM ENGINEERING Bon ENERGY DIVISIONS

  28. Slide 28: E&C Onshore - Main Ongoing Projects

    E&C ONSHORE - MAIN ONGOING PROJECTS MIDSTREAM Ital Gas Storage DOWNSTREAM Star Refinery UPSTREAM TCO future growth WPM  Dangote fertilizers PIPELINES SCPX pipeline DOWNSTREAM  Okpai Phase II Power Plant (*) DOWNSTREAM Al Zour PK4 UPSTREAM Southern swamp KOC- Feed Pipelines for PIPELINES new refine

  29. Slide 29: E&C Onshore - Recent Awards

    E&C ONSHORE - RECENT AWARDS Hawiyah Gas Plant (HGP) expansion 4Q’17 4Q’17 PEMEX Refineries - Mexico Project –Saudi Arabia AWARD AWARD  Client: Saudi Aramco  Client: Pemex  Location: Saudi Arabia  Location: Mexico  Scope of work: EPC (brownfield + greenfield) of new  Scope of work: EPC, commiss

  30. Slide 30: E&C Onshore - Opportunities

    E&C ONSHORE - OPPORTUNITIES Americas Europe/ CIS and Central Asia  Ferrostaal Pacific NW Ammonia Plant –  RFI TAV Brescia Verona – infrastructures  DOWNSTREAM downstream  INFRASTRUCT.  High Speed Railway Moscow – Kazan –  Pemex Refineries H-OIL – downstream infrastructures  RENEWABLES  RENEW

  31. Slide 31: E&C Onshore - Future Goals and Actions

    E&C ONSHORE - FUTURE GOALS AND ACTIONS • NEW MARKETS: targeting Russia, North America, South East Asia, East Africa PORTFOLIO/ • PORTFOLIO DIVERSIFICATION: enhance non-Oil and Renewables segments GEOGRAPHIES • TRADITIONAL MARKETS maintain presence in Middle East • CO2 MANAGEMENT: high-CO2 natural ga

  32. Slide 32: Divisions

    ™=_y SAIPEM ENGINEERING Bon ENERGY DIVISIONS

  33. Slide 33: E&C Offshore - Main Ongoing Projects

    E&C OFFSHORE - MAIN ONGOING PROJECTS Ørsted DECOMMISSION. BP PIPELINES Statoil OFFSHORE WIND Miller Johan Sverdrup Hornsea PIPELINES TAP Nord Stream 2 Tap PIPELINES German Landfall FIXED FACILIT. BP Shah Deniz ph. 2 PIPELINES Petrobel FIXED FACILIT. SUBSEA Saudi Aramco Zohr ORU LTA Projects PIPELINE

  34. Slide 34: E&C Offshore – Zohr: A First Time Ever

    E&C OFFSHORE – ZOHR: A FIRST TIME EVER A NEW WIN-WIN MODEL Discovery Award First Gas 17 MONTHS TO 1st GAS August July December 2015 2016 2017 A challenging recipe…. … tackled with Saipem ingredients  Fast Track Shared Approach • Demanding Technical Requirements  Early Engagement and Integrated Tea

  35. Slide 35: E&C Offshore – 4Q 2017 Awards

    E&C OFFSHORE – 4Q 2017 AWARDS Manifa Water Injection System Upgrade – Saudi Arabia  Client: Saudi Aramco under Saudi Aramco LTA Developments  Location: Arabian Gulf  Scope of work: Engineering, Procurement and Construction of a new offshore pipeline replacing the existing one and other activities

  36. Slide 36: E&C Offshore - Opportunities

    E&C OFFSHORE - OPPORTUNITIES North Atlantic Ocean North Europe, North Sea and Baltic  SUBSEA  OFFSHORE  EDF Fecamp Offshore Windfarm – renewables  FIXED  Eni Amoca-Mitzon Field – fixed facilities WIND  FIXED  EDF Courseulles Offshore Windfarm – FACILITIES  ExxonMobil Liza future dev. – subse

  37. Slide 37: E&C Offshore – Strategic Technology Targets

    E&C OFFSHORE – STRATEGIC TECHNOLOGY TARGETS INNOVATION for GLOBAL SOLUTIONS STRATEGIC ASSETS MARKETS Enhancing efficiency through New field architectures by process & equipment innovation extending subsea services HEATED PiP TECHNOLOGY PLASMA WELD. New Welding and Long Tie-Backs Testing Processes SP

  38. Slide 38: Divisions: Offshore Drilling

    DIVISIONS OFFSHORE DRILLING

  39. Slide 39: Offshore Drilling - Recent Awards

    OFFSHORE DRILLING - RECENT AWARDS 4Q 2017 awards 1Q 2018 awards Scarabeo 8 – North Sea Norwegian sector Scarabeo 8 – North Sea Norwegian sector  Client: Shell  Client: Shell  Location: offshore Norway  Location: offshore Norway  Terms: one well plus one well option  Terms: option for second we

  40. Slide 40: Offshore Drilling - Fleet Contracts

    OFFSHORE DRILLING - FLEET CONTRACTS Operative Stand-by New Contract Termination fee Optional period Preparation for Mozambique 2017 2018 2019 2020 Cyprus-M aroc- DEEP-WATER and Saipem 12000 TO 2022> Eni Portugal-M ozamb. HARSH ENV. Eni Egypt ULTRA Saipem 10000 Scarabeo 9 JV Eni-Partner Black Sea Sca

  41. Slide 41: Offshore Drilling – Fleet Improvement

    OFFSHORE DRILLING – FLEET IMPROVEMENT  Modification of Scarabeo 9 allowing to cross the Bosphorus and access new market  Saipem 12000 with 2nd BOP: fully aligned to latest requirements  Application of new digital solutions undergoing:  Smart rig (digital rig, smart maintenance)  Virtual rig (tr

  42. Slide 42: Offshore Drilling – Strategy Update

    OFFSHORE DRILLING– STRATEGY UPDATE  Focus on clients base expansion  From long-term model to short-term commitments  Further improvement of efficiency: operations, supply chain, assets integrity, digitalization  Plug&Abandonment and drilling integrated services  Evaluation of possible partnersh

  43. Slide 43: Divisions

    ™=_y SAIPEM ENGINEERING Bon ENERGY DIVISIONS

  44. Slide 44: Update on Onshore Drilling Fleet

    UPDATE ON ONSHORE DRILLING FLEET ONSHORE FLEET @ Dec. 31, 2017: 84 RIGS* REST OF THE WORLD 6 RIGS UTILISATION RATE 58% LATIN AMERICA 48 RIGS MIDDLE EAST UTILISATION RATE 23% 30 RIGS UTILISATION RATE 100% UTILISATION RATE FY 2017: 58% 44 (*) 17 RIGS REMOVED FROM THE FLEET BECAUSE COLD STACKED AND TOT

  45. Slide 45: Onshore Drilling - Focus on Latin America Right-Size

    ONSHORE DRILLING - FOCUS ON LATIN AMERICA RIGHT-SIZE DERISKED & LEANER OPERATIONS READY TO CAPTURE MARKET UPSWING Venezuela Colombia Ojeda Ecuador . . El Tigre RIGHTSIZE RIGHTSIZE. Yopal . Bogota X RIGHTSIZE Quito .. El Coca X Strategy Talara . . Iquitos XX • • Hold/grow select Countries Derisk and

  46. Slide 46: Onshore Drilling - Strategy Update

    ONSHORE DRILLING - STRATEGY UPDATE MARGIN ENHANCEMENT AND IDLENESS REDUCTION OPERATIONS  TARGET BEST-IN-CLASS HSE & OPERATIONS (c.1% NPT) EXCELLENCE  REVISED RIG KPI’s  LATIN AMERICA RIGHT SIZE GLOBAL REACH WITH NEW TARGET COUNTRIES GEOGRAPHICAL  RESTORE PRESENCE IN ALGERIA EXPANSION  NORTH AFR

  47. Slide 47: Closing Remarks and 2018 Guidance

    CLOSING REMARKS AND 2018 GUIDANCE

  48. Slide 48: New Saipem Group Strategy by Division

    NEW SAIPEM GROUP STRATEGY BY DIVISION Engage EPCI experience in early phase definition, for innovative and more efficient processes and solutions. E&C Enhance portfolio diversification and target new geographical markets. ONSHORE Maintain long-term presence in Middle East. Focus on LNG and regas. E&

  49. Slide 49: 2018 Guidance

    2018 GUIDANCE Metrics FY 2018 Revenues  c. €8bn EBITDA Adjusted % margin  >10% CAPEX  c. €300mn Net financial position  c. €1.1bn 49

  50. Slide 50: 2017: Ready for the Future

    2017: READY FOR THE FUTURE 2017 ROBUST PERFORMANCE IN A STILL CHALLENGING ENVIRONMENT STRENGTHENED FINANCIAL PROFILE ENHANCED ACCOUNTABILITY OF DIVISIONS, NEW BUSINESS OPPORTUNITIES AND FURTHER COST EFFICIENCY REGAINED ACCESS TO ALGERIAN MARKET 2018 GUIDANCE BACKED BY OPERATIONAL EFFICIENCY AND BACK

  51. Slide 51: Appendix

    ™=_y SAIPEM ENGINEERING Bon ENERGY APPENDIX

  52. Slide 52: 4Q 2017 Results

    4Q 2017 RESULTS QoQ TREND (€ mn) Revenues Adjusted EBITDA Adjusted Net Result 12.9% margin 7.9% 2,283 2,126 271 59 169 (105) 3Q17 4Q17 3Q17 4Q17 3Q17 4Q17 52

  53. Slide 53: 4Q 2017 Results – E&C

    4Q 2017 RESULTS – E&C QoQ TREND (€ mn) E&C OFFSHORE E&C ONSHORE Revenues Adj. EBITDA Revenues Adj. EBITDA 12.0% margin 24.1% 3.8% margin (7.8%) 1026 1,219 37 176 985 13 646 160 24 9 156 123 1043 (104) 825 (95) 3Q17 4Q17 3Q17 4Q17 3Q17 4Q17 3Q17 4Q17 E&C Onshore Floaters* 53 (*) Floaters business rep

  54. Slide 54: 4Q 2017 Results – Drilling

    4Q 2017 RESULTS – Drilling QoQ TREND (€ mn) DRILLING OFFSHORE DRILLING ONSHORE Revenues Adj. EBITDA Revenues Adj. EBITDA 54.2% margin 59.1% 23.5% margin 21.8% 153 137 119 124 83 81 28 27 3Q17 4Q17 3Q17 4Q17 3Q17 4Q17 3Q17 4Q17 54

Saipem — FY2017 Earnings Presentation on 6ix