LONDON, Oct. 15, 2003 (PRIMEZONE) -- Stolt Offshore S.A. (Nasdaq:SOSA) (OSE:STO) today reported results for the third quarter and nine months ended August 31, 2003. The net loss for the quarter was $22.5 million, or $0.24 per share, on net operating revenue of $397.9 million, compared with a net loss of $17.2 million, or $0.21 per share, on net operating revenue of $368.9 million for the same period last year. (Note 1)
For the nine-month period ended August 31, 2003 the Company reported a net loss of $132.0 million, or $1.42 per share, on net operating revenue of $1.2 billion. This compares with a net loss of $12.1 million, or $0.14 per share, on net operating revenue of $996.4 million for the same period last year. (Note 2)
Tom Ehret, Chief Executive Officer, Stolt Offshore, said: "A net loss for the quarter, while in line with our expectations, is still disappointing. That said, we are putting Stolt Offshore back on track and the Board is focused on returning the Company expeditiously to profit.
"Despite the demanding market conditions, experienced throughout the industry, we continued to make substantial progress on four fronts since the period end. We have taken important steps towards settlements on legacy contracts, implemented the bulk of the changes required under the Blueprint for recovery, we are working towards an agreement with the banks on financial restructuring and are making commercial progress in our target markets.
"We are on track to complete the worldwide implementation of the Blueprint model by November 30. The Board is targeting second half 2004 for improved earnings resulting from the Blueprint reforms. "All of us at Stolt Offshore are working hard to complete this period of restructuring. We have excellent people, assets and systems in Stolt Offshore but it will take time to demonstrate our full potential. I am however, confident that we will succeed."
Quarter Review
In line with market activity across the industry, we saw low order intake during the quarter, although bidding levels continue to be high.
On an operational front, successful projects in a number of areas have underlined our ability to execute demanding contracts in traditional and new markets, particularly in deepwater. Good progress was made on the ExxonMobil Erha project in Nigeria with 65% of the design engineering complete and early fabrication work on target. The Total Girassol Phase Two project in Angola concluded in August with excellent results with the installation and tie-in of pipelines, umbilicals and manifolds accomplished in record time. The two long-term ship charters with Petrobras in Brazil continue to produce steady revenues. Projects in the UK and Norway are also running well. We have extended our profitable joint venture with Lukoil for the operation of Seaway Heavy Lifting for six years to 2010.
At August 31, 2003 Stolt Offshore had $385 million drawn on long-term external debt facilities and available cash of $139.4 million. The cash balance is higher than historical levels as a result of being fully drawn on the external debt facilities and closing out foreign exchange hedges to capitalise on favourable exchange rate movements and to improve liquidity. In line with the treatment at the end of the second quarter, the Company continues to classify all debt as short term whilst restructuring negotiations are ongoing.
Blueprint Progress
The bulk of the changes in personnel, structure and processes required to implement the Blueprint are now in place, and the programme is on schedule for completion by year-end, by which time we will be in a position to reflect the costs of the Blueprint implementation. However, the following steps have been completed:
-- A new project-driven organisation, with clear lines of accountability, is largely in place. All but two of the top thirty managerial positions are filled. Cost savings will be achieved through the geographic reorganisation into new Regional Businesses.
-- The adoption of the Blueprint has enforced stringent tendering practices across our Company. These measures are designed to contain revenue and contractual risk to areas within Stolt Offshore's control, to ensure projects are at all times cash positive, and to deliver an acceptable economic return.
-- New corporate functions and control systems have been implemented across the Company, particularly in respect of financial control, project management, marine operations, strategic planning and supply chain management.
-- The previously announced disposal of assets and businesses is progressing according to plan. Discussions are now being held with interested parties on the potential sale of Serimer Dasa, our welding services business, the ROV Drill Support business, and six individual ships. We are also examining the best ownership structure and ongoing operational relationship for the Paragon companies in Houston and Paris.
Financial Restructuring
The Blueprint for financial recovery and its rapid implementation has provided the basis for Stolt Offshore to progress its negotiations with its lead creditors. The purpose of these negotiations is to redress potential covenant breaches, to increase performance bond capacity and to agree appropriate utilisation of cash proceeds from the divestment programme. To facilitate this process the Banks are considering a waiver of covenant breaches to November 26, 2003.
Projects - Revenue Recovery
During the quarter, substantial progress was made towards collecting revenues from our legacy projects.
-- We are working with our customers and making good progress completing the OGGS contract in Nigeria and closing the Burullus contract in Egypt. The Management aims to have these contracts closed by year-end.
-- The Hubline project in North America is essentially complete, but due to a dispute over the cost-plus part of this contract, there may be a delayed collection of revenues. We are confident of our legal and contractual position as we seek to collect amounts owed to us.
-- Progress continues with the installation of subsea umbilicals, risers and flowlines on the Bonga project in Nigeria. While losses have risen during the quarter, we are working closely with our customer to ensure timely completion and to mitigate losses.
Outlook
The backlog now stands at $1.2 billion, of which $334 million is for the remainder of this year. At the same point in 2002, the backlog was $1.8 billion, with $487 million for the remainder of that year. A year-on-year comparison does not reflect the improved quality of backlog or the uneven timing of contract awards inherent in our industry.
Earnings Guidance
Three outstanding issues prevent us from giving guidance at this time. These are the collection of receivables from the largely completed legacy contracts, the potential disposal of assets and businesses, and decisions on impairment of assets in the fourth quarter. It is because of the uncertainty surrounding these issues that the company indicated on September 17 that losses for the year may be substantially higher than previously indicated. The Board anticipates these will be resolved by mid-November and we expect to provide earnings guidance for Fiscal Year 2003 at that time.
Stolt Offshore is a leading offshore contractor to the oil and gas industry, specialising in technologically sophisticated deepwater engineering, flowline and pipeline lay, construction, inspection and maintenance services. The Company operates in Europe, the Middle East, West Africa, Asia Pacific, and the Americas.
Forward-Looking Statements: Certain statements made in this press release may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements may be identified by the use of words like "anticipate", "believe", "estimate", "expect", "intend", "may", "plan", "project", "will", "should", "seek", and similar expressions. The forward-looking statements reflect our current views and assumptions and are subject to risks and uncertainties. The following factors, and others which are discussed in our public filings and submissions with the U.S. Securities and Exchange Commission, are among those that may cause actual and future results and trends to differ materially from our forward-looking statements: the terms, conditions and amount of our indebtedness; our ability to recover costs on significant projects; the general economic conditions and competition in the markets and businesses in which we operate; our relationship with significant customers; the outcome of legal proceedings; uncertainties inherent in operating internationally; the impact of laws and regulations; and operating hazards, including spills and environmental damage. Many of these factors are beyond our ability to control or predict. Given these factors, you should not place undue reliance on the forward-looking statements.
Conference Call Information Replay Facility details
Lines will open 10 minutes prior This facility is available from
to conference call 5pm BST (12pm EDT)
Wednesday October 15th,
Date: Wednesday, October 15, 2003 until 10pm BST (5pm EDT),
Time: 2pm BST* (9am EDT**) Wednesday, October 22, 2003.
Freephone Dial In Numbers: Dialling from the UK:
UK:0800 953 0938 0800 953 1533
USA:1 866 389 9773 Dialling from the US:
Norway:800 165 33 1 866 276 1167
France:0805 110 466
Italy:800 783 256 International Dial In:
Netherlands:0800 023 4993 44 1452 55 00 00
International Dial In: Passcode: 111900#
+44 1452 569113
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** EDT =Eastern Daylight Saving
Time
Alternatively a live webcast and a playback facility will be available on the Company's website www.stoltoffshore.com
(1) The weighted-average number of common share equivalents outstanding for the quarter was 92.4 million compared with 83.1 million for the same period of 2002.
(2) The weighted-average number of common share equivalents outstanding for the latest nine-month period was 92.7 million compared with 85.1 million for the first nine months of last year.
To download the 3rd. quarter presentation please use the following link: http://hugin.info/181/R/920659/124027.pdf
To download the 3rd. quarter report please use the following link: http://hugin.info/181/R/920658/124026.pdf