Subsea 7 (OB: SUBC) posted strong headline figures for 2012, and ended the year with a record $9.1bn (£6.1bn) order backlog, although the Oslo-listed seabed engineer warned that much of the work linked to recent contract awards won't commence till 2014, while supply chain bottlenecks "will temper the rate of progress" this year.
Revenues were buoyed by higher levels of seabed-to-surface activity in the North Sea, Canada and Brazil, although an impressive 16 per cent hike in gross profits to $1.1bn was held in check by a $52m increase in losses on the Guará-Lula project in Brazil's Santos Basin. Subsea 7 also booked a $244m gain on the disposal of an interest in NKT Flexibles. The group nearly doubled borrowings to $1.5bn on the back of a placement of convertible notes, although this also resulted in a $485m increase in cash to $1.3bn, so net debt is modest.
Subsea 7 said that increased rates of depreciation, tax and finance costs would constrict earnings this year, while first-quarter performance will be impacted by lower rates of rig utilisation linked to scheduled maintenance and dry-docking. Nevertheless, the level of tendering activity in the early part of 2013 is certainly encouraging, with over $1.7bn in new contracts secured from industry heavyweights such as Shell, Statoil, Petrobras, PEMEX and Sinopec.
Prior to these figures JPMorgan Cazenove were forecasting 2013 EPS of $1.82 (from $1.59 in 2012).
| SUBSEA 7 (SUBC: NO) | ||||
|---|---|---|---|---|
| ORD PRICE: | NOK142.9 | MARKET VALUE: | NOK50.3bn | |
| TOUCH: | NOK141-NOK143 | 12-MONTH HIGH: | NOK148 | LOW: NOK107 |
| DIVIDEND YIELD: | nil** | PE RATIO: | 10 | |
| NET ASSET VALUE: | 1,798¢* | NET DEBT: | 4% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2010 | 2.21 | 0.36 | 130 | nil |
| 2010 | 2.37 | 0.40 | 120 | nil |
| 2011 † | 5.48 | 0.63 | 131 | nil** |
| 2012 | 6.30 | 1.07 | 249 | nil** |
| % change | +15 | +70 | +90 | - |
Ex-div: na Payment: 28 Jun *Includes intangible assets of $2.6bn, or 739¢ a share **Excludes special dividends: 60¢ in 2011 and 60¢ in 2012 †Thirteen months £1=NOK8.54 $1=NOK5.72 | ||||
