15IO Euro.bk. 36

RNS Number:5041C
Kvaerner PLC
24 April 2001

Kvaerner Group reports further progress - first quarter results

LONDON, 24 APRIL 2001: Kvaerner ASA, the Anglo-Norwegian engineering and
construction Group, today announced its results for the three months ending 31
March, 2001.  Pre-tax profit for the period amounted to NOK 151 million; the
operating profit was NOK 261 million; and turnover totalled NOK 10.5 billion. 


HIGHLIGHTS
- Profit before tax for the first quarter amounted to NOK 151 million (2000:
NOK 10 million) representing a positive swing of NOK 141 million from the
first quarter 2000.  Compared to the previous quarter (NOK 80 million,
excluding exceptional items) the improvement was NOK 71 million.

- Group operating profit for the first quarter amounted to NOK 261 million,
(2000: NOK 189 million, excluding Construction) representing a NOK 72 million
improvement over the first quarter 2000, and NOK 36 million when compared to
the fourth quarter 2000.

- Operating margin improved to 2.5 per cent, against 1.8 per cent in the first
quarter last year, and 1.9 per cent in the previous quarter.

- Group turnover for the period amounted to NOK 10.5 billion - which is on a
par with the same period last year (adjusted for the sale of Construction).

- Order intake for the Group during the first quarter of NOK 8.5 billion is
largely in line with the previous quarter, with the order reserve standing at
NOK 48.3 billion - a reduction of NOK 2.8 billion since the year-end.

- For the core businesses combined, the operating profit in the first quarter
amounted to NOK 213 million (2000: NOK 118 million).  This is slightly below
the previous quarter (NOK 223 million).

- The Oil & Gas result significantly improved with an operating profit of NOK
96 million in the first quarter, compared with NOK 6 million for the same
period last year, and NOK 57 million in the fourth quarter of 2000;  E&C's
result was NOK 117 million, against NOK 166 million in the fourth quarter, in
light of the reduced turnover.

- Operating margin continued to improve and was 3.5 per cent in the reporting
period, against 2.8 per cent the previous quarter, and 1.8 per cent in the
first quarter of 2000.

- The core business order intake in the first quarter was NOK 6.7 billion. 

- The order reserve for the core business remained at the same level as the
year-end.


GROUP RESULTS AT A GLANCE

NOK millions                            1Q 2001        1Q2000       YR2000

Turnover                                 10,498        14,213       54,472   
Operating profit                            261           259        1,243 
Profit before tax                           151            10          513    
Order intake                              8,454        11,969*      54,845    
Order reserve/ end of period             48,310        39,535       51,122  
*Excluding Construction

The Group operating result for the first quarter was a profit of NOK 261
million (2000: NOK 189 million, adjusted for the sale of Construction).   The
first quarter operating profit for the core businesses, E&C (Engineering &
Construction) and Oil & Gas, amounted to NOK 213 million, which represents an
improvement of NOK 99 million over the same period in 2000.  E&C's operating
profit of NOK 117 million was a slight improvement over the first quarter
result in 2000, and the profit in Oil & Gas represents a NOK 90 million
improvement over the comparable result last year of NOK 6 million. The first
quarter operating profit for Other Businesses amounted to NOK 48 million.  
Group turnover for the first quarter amounted to NOK 10.5 billion (2000: NOK
10.9 billion, excluding Construction).  

After net financial items of NOK 110 million in the first quarter, the profit
before tax amounted to NOK 151 million, which compares with the figure of NOK
10 million for the same period last year.

ORDER INTAKE AND RESERVE
For the Group as a whole, the order intake of NOK 8.5 billion is largely in
line with the position in the previous quarter, whilst NOK 3.5 billion lower
than the comparable period last year (excluding Construction).  Last year's
first quarter order intake was influenced by particularly strong figures from
E&C and Shipbuilding.  The combined order intake for E&C and Oil & Gas during
the first quarter this year amounted to NOK 6.7 billion. 
At the end of the quarter, the order reserve for the Group as a whole stood at
NOK 48.3 billion, representing an increase of NOK 8.8 billion when compared to
the position at the end of the first quarter 2000, excluding Construction. 
Although slightly lower than the position at the year-end 2000, this is
largely attributable to run-off of the strong order reserve built-up in
Shipbuilding during last year.  

OPERATIONAL IMPROVEMENTS
Indirect overhead costs for the quarter in the core business areas and
corporate functions showed a reduction of 8 per cent compared to the
corresponding amount last year.   

CORE BUSINESS RESULTS

E&C
NOK millions                            1Q 2001        1Q2000       YR2000

Turnover                                  3,527         3,576       16,407    
Operating profit                            117           108          508 
Order intake                              2,879         5,608       17,159
Order reserve/ end of period             11,470        13,894       12,052 

The operating profit for the period was NOK 117 million and represents a 17
per cent improvement over the first quarter of 2000, (excluding the
Hydrocarbons activity, now transferred to Oil & Gas).  All major business
streams were profitable in the period, the largest contributors to the result
being Process, Technology, and Construction.  A weaker result from the Metals
business stream was mainly attributable to a downturn in the North American
steel market.    

At 3.3 per cent, operating margins have continued to improve, compared to 3.0
per cent for the first quarter of 2000 and 3.1 per cent in the fourth quarter.
Order intake for the period amounted to NOK 2.9 billion, against NOK 3.8
billion in the fourth quarter, reflecting a weakening in some markets due to
the overall slow-down in the U.S. economy.  The order reserve at the end of
the quarter stood at NOK 11.5 billion, which is broadly on a par with the
year-end position (NOK 12.1 billion).

Oil & Gas
NOK millions                            1Q 2001        1Q2000       YR2000

Turnover                                  2,514         3,122       11,304    
Operating profit                             96             6          148 
Order intake                              3,849         2,186       12,394
Order reserve/ end of period             10,214         6,665        8,969 

The operating result for the first quarter was a profit of NOK 96 million,
exceeding the comparable figure last year by NOK 90 million.  This result is
mainly attributable to a good result in the Field Development business stream.
 Oilfield Products again showed a consistently positive performance.  
Operating margins improved from 2.2 per cent in the previous quarter to 3.8
per cent in the first quarter 2001.

Order intake for the quarter was higher than anticipated at NOK 3.8 billion
(2000: NOK 2.2 billion).  The largest order secured was for the utility and
living quarters modules for Grane.  At the end of the quarter, the order
reserve stood at NOK 10.2 billion, an improvement of NOK 1.2 billion over the
year-end position, and NOK 3.5 billion higher than last year.  All operating
units improved their future work-load compared to the previous quarter.  

OTHER BUSINESSES
The first quarter out-turn for Other Businesses (including Shipbuilding, Pulp
& Paper and other remaining activities), was an operating profit of NOK 48
million, compared to NOK 2 million in the previous quarter.   
Shipbuilding: The operating result for the quarter was a profit of NOK 59
million, against a loss of NOK 42 million in the previous quarter.  A
satisfactory result from Masa-Yards in Finland was offset by losses incurred
at the new Philadelphia yard in the USA, where the first ship is now being
built.  The Warnow result reflects a lack of contribution from the production
of a drilling rig for Stena, due for completion at the end of July.
At Masa-Yards, the 85,700 GT cruise ship 'Carnival Spirit' was delivered on
schedule in early April, and the third of five giant 'Voyager'-class cruise
ships for Royal Caribbean is on schedule for delivery later this year.  
Pulp & Paper: The operating profit for the first quarter was NOK 14 million
(2000: NOK 18 million).  The main contributors to this result were the Power
division and the Fiberline division. 

Order intake during the quarter was NOK 1.2 billion (2000: NOK 764 million),
contributing to a satisfactory order reserve of NOK 3.5 billion, comparable to
both the position for the first quarter 2000, and for the last year-end.
Other activities: The combined result for these discontinuing businesses in
the quarter, which includes the mechanical fabrication activities in Romania,
was a loss of NOK 25 million.  As previously reported, it is expected that
this position will gradually improve during the year, as a result of margin
improvements and activity reduction.

INVESTMENT, FINANCING AND LIQUIDITY
Cash, bank deposits and debt: Net interest-bearing liabilities at the end of
the first quarter amounted to NOK 6.1 billion, which is an increase of NOK 0.7
billion since the year-end, due to the build-up of work in progress within
Shipbuilding in anticipation of an April delivery.  The vessel was delivered
as scheduled and NOK 850 million was received in net proceeds.  For the year
as a whole, net-interest bearing debt is expected to further reduce
significantly, following the trend of the previous two years.

The Group received cash proceeds of almost NOK 1.2 billion from the sale of
the Baltic Exchange early in the first quarter.  Net working capital at the
end of the first quarter amounted to NOK 4.8 billion, compared to NOK 4.2
billion at the end of the previous quarter.  Cash flow in the first quarter
before financing was negative at NOK 678 million.

Negotiations were completed with lenders in the first quarter for a new
financing facility of US$ 450 million.  This is now in place and the major
facility due for repayment in 2001 has now been cancelled.   

For more information:  

Trond Andresen, Senior Vice President, Group Communications: +44 (0)7770
856550 or 

Paul Emberley, Vice President Group Communications: +44 (0)20 7339 1035 or 
+44 (0)7768 813090.  

To download the press release, fourth quarter report and
presentation, go to www.kvaerner.com/finance  

Notes to editors:

NOK = Norwegian Kroner;  US$/NOK - .9.0;  UK#/NOK - 13.0;  EUR /NOK - 8.1

A combined media/ analyst conference call will take place later today at 2pm
(London time)/ 9am (EST). John Charlton, Kvaerner's CFO, will present the
results and answer questions.  In the UK and Europe, participants may dial-in,
listen and take part in the conference call live by calling +44 (0)20 8781
0596 quoting "Kvaerner".  In North America, at 9am (EST), participants may
call  +1 800 482 2225 quoting "Kvaerner".  An instant replay will also be
available for a period of five working days after the conference by calling
(UK) +44 (0)20 8288 4459 (access code: 677012) or in the USA, call +1 800 625
5288 (access code: 1016356) 

Kvaerner is a world-class Anglo-Norwegian engineering and construction group.
The Group's activities are organised in two core business areas: E&C
(engineering and construction), and Oil & Gas.  It also has interests in
shipbuilding and the provision of services to the pulping industry.  Kvaerner
is a Norwegian registered business, but has a London, UK-based international
headquarters.  The Group has annual revenues of more than US$6 billion, with
some 35,000 permanent staff located in almost 35 countries throughout Europe,
Asia and the Americas. 

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