Saipem S.p.a. · MIL:SPM

Saipem — FY2018 Earnings Presentation

38 slides from Saipem's earnings presentation, Feb 28, 2019

  1. Slide 1: 2018 Full Year Results Presentation

    2018 FULL YEAR RESULTS PRESENTATION 28 February 2019 Photo: Ørjan Richardsen / Woldcam / Statoil

  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 FY2018 RESULTS 3 MARKET AND PORTFOLIO UPDATE 4 BUSINESS UPDATE 5 CLOSING REMARKS AND 2019 GUIDANCE 3

  4. Slide 4: Opening Remarks

    OPENING REMARKS 2018 results ahead of target  Strong E&C Offshore execution throughout the year  Progress in E&C Onshore turnaround  Resilience in Drilling margins supported by efficiency measures Net result influenced by special items “Promising” negotiations for amicable settlement of South Str

  5. Slide 5: FY2018 Results

    FY2018 RESULTS 28 February 2019

  6. Slide 6: FY 2018 Results

    FY 2018 RESULTS YoY COMPARISON (€ mn) Revenues Adjusted EBITDA Adjusted Net Result 10.7% margin 11.7% 8,999 8,526 1,002 964 46 25 FY17 FY18 FY17 FY18 FY17 FY18* (*) Loss from a project-related equity affiliate is included in Adjusted Net Result 6

  7. Slide 7: FY 2018 Adjusted Results – E&C

    FY 2018 ADJUSTED RESULTS – E&C YoY COMPARISON (€ mn) E&C OFFSHORE E&C ONSHORE* Revenues EBITDA Revenues EBITDA 3,852 15.0% margin 13.6% 4,204 (0.5)% margin 3.1% 3,692 3,769 118 555 523 (21) FY17 FY18 FY17 FY18 FY17 FY18** FY17 FY18 • Higher volumes in Middle East and North Sea more • Lower volumes i

  8. Slide 8: FY 2018 Adjusted Results – Drilling

    FY 2018 ADJUSTED RESULTS – Drilling YoY COMPARISON (€ mn) DRILLING OFFSHORE DRILLING ONSHORE Revenues EBITDA Revenues EBITDA 613 52.4% margin 48.6% 501 22.2% margin 26.9% 490 465 321 135 109 226 FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18 • Lower volumes mainly due to idleness of Semi-subs • Volumes ste

  9. Slide 9: FY 2018 Net Result

    FY 2018 NET RESULT RECONCILIATION Net Result (€ mn) 25 (45) Drilling and (109) (87) Floaters Assets Offshore Drilling (196) Assets E&C (60) Onshore Goodwill (343) (472) Legacy Provisions for Legal Cases and Impairments FY18 Redundancies Litigations and Write Downs FY18 Adjusted Reported SPECIAL ITEM

  10. Slide 10: FY 2018 Results - From Adjusted EBITDA to Net Result

    FY 2018 RESULTS - FROM EBITDA Adjusted TO NET RESULT 524 D&A 468 € mn FY2017 196 205 D&A 122 106 133 117 73 40 FY2018 Offshore Onshore E&C E&C Total (*) Floaters business Drilling Drilling Onshore* Offshore D&A included in E&C Onshore 2018 € mn 5 165 FINANCE 56 104 CHARGES Financing costs Project he

  11. Slide 11: FY 2018 Net Debt Evolution (€ bn)

    FY 2018 NET DEBT EVOLUTION (€ bn) Good cash flow generation in 2018 1.30 (0.49) 0.49 (0.14) 1.16 CONSTELLATION Net 1 Debt 2 Flow Adj. Cash 3 Capex* 4 Δ Working Net5Debt @Dec. 31, 2017 (Adj. N.P.+ D&A) Capital and @Dec. 31, 2018 Others** (*) Includes full payment for Saipem Constellation acquisition

  12. Slide 12: Capital Structure as of December 31, 2018

    CAPITAL STRUCTURE AS OF DECEMBER 31, 2018 (€ mn) Stable debt maturity profile Bonds ECA Facilities Bank Facilities Other Debt 2,316 258 Undrawn ECA* Facilities (GIEK and Atradius) 1,000 Undrawn RCF* 637 623 598 575 63 63 38 Available Cash 261 75 60 75 1,058 176 60 and equiv.** 60 72 500 500 500 500

  13. Slide 13: IFRS Impacts

    IFRS IMPACTS IFRS16 ADOPTION FROM JANUARY 1, 2019 F E AT U R E S • Asset “Right-of-Use” in capital employed and depreciated • Lease obligations increasing net debt • Financial charges applied over lease debt RESTATEMENT AT 1st January 2019 I M PA C T S INITIAL  Modified retrospective approach appli

  14. Slide 14: Market and Portfolio Update

    MARKET AND PORTFOLIO UPDATE 28 February 2019

  15. Slide 15: Market Outlook

    MARKET OUTLOOK SOFT E&P SPENDING OPPORTUNITIES IN MARKET VOLATILITY RECOVERY ENERGY TRANSITION Today Long Term Energy Mix Scenarios Coal Renewables E&C index Drilling index Oil&Gas Brent price High CO2 Low CO2 Source: Saipem elaboration on Bloomberg Source: Saipem elaboration on IHS Markit control c

  16. Slide 16: Portfolio Strategy Update 1/2

    PORTFOLIO STRATEGY UPDATE 1/2 E&C OFFSHORE AND ONSHORE E&C OFFSHORE E&C ONSHORE STRENGTHEN COMPLETE LEADING TURNAROUND COMPETITIVE POSITION Competitive context Competitive context  Recovery signals in a challenging market  Promising market, especially LNG and downstream  Race for innovative and c

  17. Slide 17: Portfolio Strategy Update 2/2

    PORTFOLIO STRATEGY UPDATE 2/2 DRILLING OFFSHORE AND ONSHORE COMPETITIVE CONTEXT OUR PERFORMANCE  Tough market context, especially offshore  Continued focus on cost base optimization  High industry leverage  Resilient economic performance  Many players reviewing consolidation options  Maintenan

  18. Slide 18: Our Innovation Model

    OUR INNOVATION MODEL A COMMON THREAD FOR ALL DIVISIONS Evolution Disruption two pillars of Saipem’s technological innovation CONVENTIONAL Plasma New Materials Subsea Flowline SPRINGSTM HYDRONE Subsea-to- Welding for UREA plants Heating Subsea Platform Shore DECARBONISATION & ENVIRONMENT CO2 Oil Spil

  19. Slide 19: Our Sustainable Business Model

    OUR SUSTAINABLE BUSINESS MODEL  CEO and Board level responsibility  Senior management incentives linked to material sustainability topics  Enhanced ESG reporting and proactive stakeholder engagement  Improved scoring by most reputable ESG rating agencies  Included in leading sustainability indi

  20. Slide 20: Business Update

    BUSINESS UPDATE 28 February 2019

  21. Slide 21: E&C Offshore Main Recent Awards

    E&C OFFSHORE MAIN RECENT AWARDS ZOHR RAMP UP TO PLATEAU PHASE  Client: Petrobel  Location: offshore Egypt  Scope of work: EPCI for subsea field development and installation/ precommissioning of new 30” Gas export pipeline  Main vessels employed: CastorOne, S7000, FDS, CastoroSei, Normand Maximus

  22. Slide 22: E&C Offshore Divisional Strategy

    E&C OFFSHORE DIVISIONAL STRATEGY STRATEGIC SUBSEA: Expand in Reeling, Integrated SURF, Life of Field, Subsea Processing MARKETS PIPELINES and CONVENTIONAL: Consolidate Leadership OFFSHORE WINDFARMS: Leverage on Footprint and Assets DIVERSIFICATION DECOMMISSIONING: Service Oriented Approach MMO: Dive

  23. Slide 23: E&C Onshore Main Recent Awards

    E&C ONSHORE MAIN RECENT AWARDS ARCTIC LNG 2 GBS  Client: LLC ARCTIC LNG-2  Location: Gydan peninsula, Russia  Scope of work: construction of 3 Concrete Gravity Based Structures (GBS) with LNG storage facilities totaling 687,000 m3 PROJECT HIGHLIGHTS: — Highly Strategic project in terms of Client,

  24. Slide 24: E&C Onshore Divisional Strategy

    E&C ONSHORE DIVISIONAL STRATEGY Providing carbon-neutral BECOME THE operations along the PARTNER OF entire EPC value chain CHOICE FOR CLIENTS Providing solutions to shorten time-to-market COMMITTED TO THE ENERGY Consolidation in TRANSITION Core markets & products 5 KEY GROWTH TARGETS TOTAL OPERATING

  25. Slide 25: Divisional Strategy

    DIVISIONAL STRATEGY  Engage clients in early phase definition SCOPE  Disrupt traditional processes and solutions  Innovate throughout asset life span 1. Foster client relationships through engineering and consultancy services PRIORITIES 2. Unlock opportunities for E&C Divisions 3. Commercialise f

  26. Slide 26: Offshore Drilling Main Awards - 4Q 2018

    OFFSHORE DRILLING MAIN AWARDS - 4Q 2018 MITZON PROJECT IN MEXICO  Client: Eni  Location: Mexico  Terms: 15 firm wells for c. 3 year operations (plus options)  RIG: Pioneer HIGHLIGHTS:  Expansion to a new very promising area  Acquisition of one of the few long term business opportunity currentl

  27. Slide 27: Offshore Drilling Fleet

    OFFSHORE DRILLING FLEET Committed New awards in 4Q18 and 1Q19 to date Optional period 2018 2019 2020 CLIENT AREA TO Cyprus-Morocco DEEP-WATER and Saipem 12000 2022> Eni Pakistan-Mozamb. HARSH ENV. Eni Egypt ULTRA Saipem 10000 Scarabeo 9 Eni Egypt Shell - Total - Scarabeo 8 Norway AkerBP - Eni WATER

  28. Slide 28: Onshore Drilling Main Awards - 4Q 2018

    ONSHORE DRILLING MAIN AWARDS - 4Q 2018 NEW DRILLING ACTIVITIES IN ARGENTINA  TWO LONG TERM CONTRACTS  Client: YPF  Location: Vaca Muerta area  Terms: 5 year each contract  Project Highlights: Activities in the unconventional field with fast moving highly efficient rigs Rig operating in the Vaca

  29. Slide 29: Onshore Drilling Fleet

    ONSHORE DRILLING FLEET ONSHORE FLEET @ DECEMBER 31, 2018: 84 RIGS REST OF THE WORLD 5 RIGS UTILISATION RATE 78% LATIN AMERICA 48 RIGS MIDDLE EAST 31 RIGS UTILISATION RATE 27% UTILISATION RATE 100% UTILISATION RATE IN 2018: 65% 29

  30. Slide 30: 2018 Backlog IFRS View (€ mn)

    2018 BACKLOG IFRS VIEW (€ mn) 12,392 8,526 8,753 12,619 855 599 716 947 4,085 3,708 6,323 5,946 3,852 4,189 4,644 4,981 Backlog FY18 FY18 Contracts Backlog @Dec. 31, 2017 Revenues Acquisition @Dec. 31, 2018 E&C Offshore E&C Onshore* Drilling Offshore Drilling Onshore NON-CONSOLIDATED BACKLOG @ Dec.

  31. Slide 31: Backlog by Year of Execution

    BACKLOG BY YEAR OF EXECUTION IFRS VIEW (€ mn) 6,506 354 347 2,808 3,197 2,916 229 140 1,742 1,773 2,997 1,111 873 2019 2020 2021+ E&C Offshore E&C Onshore* Drilling Offshore Drilling Onshore NON-CONSOLIDATED BACKLOG BY YEAR OF EXECUTION 2019 2020 2021+ € mn 127 331 1,386 31 (*) E&C Onshore including

  32. Slide 32: Guidance and Closing Remarks

    GUIDANCE AND CLOSING REMARKS 28 February 2019

  33. Slide 33: 2019 Guidance

    2019 GUIDANCE Metrics FY 2019* Revenues  c. €9bn Adjusted EBITDA % margin  >10% CAPEX  c. €500mn Net financial position  c. €1.0bn (*) Not inclusive of the impact of IFRS 16 33

  34. Slide 34: Closing Remarks

    CLOSING REMARKS 2018 AHEAD OF GUIDANCE DUE TO STRONG OPERATIONAL PERFORMANCE AND CASH GENERATION PROMISING NEGOTIATIONS FOR AMICABLE SETTLEMENT OF SOUTH STREAM ARBITRATION IMPROVING MARKET OUTLOOK ON E&P SPENDING AND OPPORTUNITIES IN THE ENERGY TRANSITION CONTINUING EVOLUTION TOWARD A GLOBAL SOLUTIO

  35. Slide 35: Appendix

    — SAIPEM APPENDIX 28 February 2019

  36. Slide 36: FY 2018 Results QoQ Trend (€ mn)

    FY 2018 RESULTS QoQ TREND (€ mn) Revenues Adjusted EBITDA Adjusted Net Result 12.3% margin 9.7% 2,469 2,259 277 242 11 8 3Q18 4Q18* 3Q18 4Q18 3Q18** 4Q18 (*) Adjusted Revenues: €2,489mn (**) Loss from a project-related equity affiliate is included in Adjusted Net Result 36

  37. Slide 37: FY 2018 Results QoQ Trend (€ mn)

    FY 2018 RESULTS QoQ TREND (€ mn) E&C OFFSHORE E&C ONSHORE* Revenues EBITDA Revenues EBITDA 15.3% margin 9.7% 3.1% margin 3.1% 1,062 1,189 1,040 163 958 37 30 101 3Q18 4Q18 3Q18 4Q18 3Q18 4Q18 3Q18** 4Q18 (**) EBITDA does not reflect loss from project- related equity affiliate DRILLING OFFSHORE DRILL

  38. Slide 38: FFF2.0 – Update on Redundancy Plan

    FFF2.0 – UPDATE ON REDUNDANCY PLAN RELEASES CONFIRMED FOR c.1,250 FTE c.1,250 FTE RUN RATE Achieved  >1,200 CUMULATIVE 900 100 HEADCOUNT REDUCTION Achieved 100 (FTE)  450 >900 800 >1,100 2018 Additional Plan 2017 Redundancy Plan 2017 2018 2019E CUMULATIVE SAVINGS (€mn) 20 60 90 c.105mn RUN RATE SA

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