News Column

TTS Group ASA - Continued focus on profitability

August 22, 2014

ENP Newswire - 22 August 2014

Release date- 21082014 - TTS Group ASA operating loss before depreciation in the second quarter of 2014 was MNOK, compared with a loss of MNOK 28 in the first quarter of 2014 - These results are not satisfactory, especially in Offshore & Heavy Lift.

But we are beginning to see the results of the extensive measures taken to achieve the Code for profitability, says CEO Bjorn Andersson in a comment.

The quarter was characterized by a significantly lower activity compared with the same period last year. Especially in the area of Offshore & Heavy Lift the utilization is too low. - We have loss within Offshore & Heavy lift but earn money within the Marine and Services divisions. We recognize that there is a weak quarterly result we now present, and we are obviously not happy with red figures, says Bjorn Andersson. Revenues in the quarter were NOK 617, which is MNOK 141 lower than the same period in 2013. Loss before depreciation so far this year is MNOK 39.

The Group's total order intake so far this year was MNOK 1,823, included TTS' part of Joint Ventures, compared with MNOK 1,408 in the same period in 2013. The backlog of orders increased significantly compared to last year, from NOK 2.3 billion in 2013 to NOK 3.3 billion in 2014. - Through our joint ventures in China, we have a gross order intake of MNOK 350, and has signed several major contracts recently. We see that the market is definitely there.

Our challenge now is to meet this market with efficiency and profitability, says Bjorn Andersson. Quarterly results per division Marine Division the Marine Division provides cranes, winches and hatch covers for car carriers (RoRo / PCTC), cargo ships, cruise ships and specialized vessels.

The division includes the former Port & Logistics Division, which supplies production lines and systems for cargo handling in shipyards and other industries, as well as loading and transport to ports. The division accounts for about 50 percent of total turnover in the TTS Group. The product area Car Carriers, based in Gothenburg, Sweden, shows continued strong growth and high earnings in the quarter.

The division as a whole has slightly lower earnings in 2014 than in 2013, partly due to lower margins on deck equipment and challenges in individual projects within Port & Logistics. These areas are characterized by a low level of activity in the quarter. The order backlog has increased significantly and the market outlook is very good for the core areas within the division.

The division's revenues for the period were MNOK 309, on line with same period last year. The result before depreciation (EBITDA) was MNOK 22.9, which is MNOK 14 less compared with same period last year. Order backlog in the division increased by MNOK 939 compared with the same period in 2013 and totaled NOK 2.5 billion at the end of the quarter.

New orders were particularly strong for equipment for car carriers, where several customers in the shipbuilding industry have utilized options in previous agreements. The board and administration are currently assessing restructuring alternatives.

Offshore & Heavy Lift Division the Offshore & Heavy Lift Division supplies all types of cranes for offshore vessels and offshore installations. The division focuses specifically on cranes for heavy lifts and cranes with Active Heave compensation. The division accounts for 27 percent of total turnover in TTS.

Turnover in the Offshore & Heavy Lift Division, in the second quarter, is about MNOK 100 lower than the same period last year. Both NMS and OHE, which together account for around 70 percent of the division's total revenue, deliver weak results. Operating loss (EBITDA) in the second quarter was MNOK 38. The division has had low utilization of production facilities in Shanghai and Germany.

There has been a restructuring of workforce reductions totaling 100 positions this year. From May 2014 through the summer, are signed several major contracts with Chinese shipyards for delivery of both offshore, cargo- and multipurpose cranes. The total value of these orders represent more than MNOK 200. Loss before depreciation was MNOK 41.6, compared with a loss of MNOK 6.9 the same period last year.

Much is due to the division's indirect costs due to low margins; going straight to the bottom line as well as large overruns on projects continues to affect the results. Since the numbers are still too weak, the extensive cost-cutting measures implemented in the division in the first quarter, continues unabated.

The order backlog at the end of the second quarter 2014 was MNOK 869, which is up MNOK 62 compared with the same period in 2013. Services Division the Services division provides services and maintenance to all divisions of TTS, accounting for 23 percent of total turnover. The division's revenues for the second quarter were MNOK 142, up MNOK 40 compared to same period last year. The division is showing a positive development.

The market is characterized by fierce competition, especially on spare parts and equipment. Margins are still pressed down, but you also see that the outlook is steadily increasing for the division. The network is now being expanded globally. During the second quarter, the TTS also is established in Brazil, while a start up in Houston, US will be made by the end of the third quarter.

Profit before depreciation was for the Services division MNOK 12.8, up from MNOK 11.9 in the same quarter of 2013. Market Outlook TTS continues the extensive efforts to improve profitability. - I would point out that we are still in the midst of a major turnaround for the company. From experience, I know that such operations will always be characterized by unpredictability and surprises along the way - both good and bad. The losses are reduced during the period and you start to see the outlines of improvement in underlying profitability, says Bjorn Andersson.

About TTS Group ASA

TTS Group ASA is a global enterprise that designs, develops and supplies equipment, solutions and services for the marine and offshore industries. TTS is one of the top three largest suppliers in its specialized market segments. The Company, with headquarters in Bergen, Norway, is listed on the Oslo Stock Exchange.


Bjorn Andersson

Tel: +47 911 33 671

Henrik Solberg-Johansen

Tel: +47 982 06 438

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Source: ENP Newswire

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