TTS strengthens company equity

TTS Marine ASA is an international group that develops and supplies handling equipment for ships, ports and to oil and gas installations. The TTS Group’s turnover in the first quarter of 2009 was NOK 1 064 million, an increase of 22 percent compared to the same period in 2008. Earnings before depreciation (EBITDA) resulted in a loss of NOK 27.4 million, compared to 60.1 million after the first quarter last year. This includes appropriations of NOK 72 million for potential losses on accounts receivable, primarily related to deliveries to Ability Drilling. Pre-tax profit was a loss of NOK 152.9 million, compared to NOK 40.2 million in the same period last year. In the quarterly accounts, TTS has conducted a write-down of goodwill relating to acquisitions of approximately NOK 100 million.

- The negative profit performance is primarily related to our contracts with Ability Drilling, where we, as a result of lack of payment for deliveries made, have petitioned the court for bankruptcy of this company, an action which the company itself presently has undertaken. We have made painstaking efforts to find other solutions, but have unfortunately had to realise that this was unachievable. We would like to emphasise that the allegations and demands made against TTS through the media by Ability Drilling have no basis in reality and are unwarranted, says the president and CEO. 

Johannes D. Neteland maintains that TTS will focus on increasing sales in a market that still provides many opportunities. - The order intake in the first quarter was NOK 851 million, compared to NOK 580 million in the fourth quarter of 2008. Since the start of the year, the order backlog has decreased by NOK 895 million, primarily owing to the cancellation of land rigs ordered by Ability Drilling. This alone constitutes NOK 580 million in cancelled orders for the quarter.  Other cancellations constitute approximately NOK 108 million; considerably less than in the fourth quarter last year. In total, the order backlog at the end of the first quarter was NOK 7 264 million, providing us with a solid foundation for continued growth.

Dry Cargo Handling Division
Through its activities in the Dry Cargo Handling division, TTS is a leading supplier of cargo handling systems for ships; side loading systems, Ro-Ro equipment, hatch covers and special equipment for yachts and cruise ships.

The Dry Cargo Handling division’s turnover in first quarter was NOK 298 million, an increase of 11 percent compared to the same period in 2008. Operating profit before depreciation was NOK 18.6 million, compared to NOK 23.1 million at the end of the first quarter last year. The fall in margins is associated with the relatively high quota of complete deliveries of hatch covers during the quarter.

At the end of the first quarter, the Dry Cargo Handling division reported an order backlog of NOK 2 839 million, an increase of NOK 114 million compared to the same period last year. These figures include 50 percent of the order backlog of the joint venture companies TTS Hua Hai Ships Equipment Co Ltd. and TTS Keyon Co Ltd. in China.

Marine Cranes Division
TTS’ Marine Cranes division develops and supplies marine cranes, and is the world’s leading supplier of hose handling cranes. The division is furthermore a major supplier of provision cranes and cargo cranes. For the offshore sector, the division delivers cranes and other handling equipment for vessels and installations related to drilling and production of oil and gas.

The Marine Cranes division reported a turnover in the first quarter of NOK 272 million, a 7 percent increase compared to the same period last year. Operating profit before depreciation was NOK 3.6 million, compared to NOK 14.2 million at the end of the first quarter last year. The decline in profit is a result of costs of purchase of steel and assembly in individual projects, as well as foreign currency losses.

At the end of the first quarter, the order backlog of the Marine Cranes division was NOK 2 239 million, a decrease of NOK 367 million compared to the same period in 2008. The order intake in the first three months of 2009 has been lower than anticipated. 

Port and Material Handling Division
The Port and Material Handling division supplies shipyard production systems and systems for handling of containers in ports and other industries, in addition to cargo and transport systems to ports.

After the first three months of 2009, the division reported a turnover of NOK 65 million, a 5 percent decrease compared to the same period last year. Operating profit before depreciation was NOK 4.6 million, compared to NOK 4.9 million in the first quarter of 2008.

At the end of the first quarter, the order backlog of the Port and Material Handling division was NOK 294 million, a decrease of NOK 21 million compared to the same period in 2008. The market outlook for the division’s products remains good.
 
Deck Machinery Division
The Deck Machinery division supplies various types of winches and other deck machinery to the maritime and offshore industries.

In the first quarter of 2009, the Deck Machinery division reported a turnover of NOK 87 million, a 23 percent increase compared to the first three months of 2008. Operating profit before depreciation was NOK 3.3 million, compared to NOK 4.8 million at the end of the first quarter last year.

At the end of the first quarter of 2009, the order backlog of the Deck Machinery division was NOK 1 093 million, an increase of NOK 388 million compared to the same period in 2008. The order intake in the first three months of the year was better than expected, and the level of activity in the market for the division’s products remains high.

Drilling Equipment Division
The Drilling Equipment division supplies drilling equipment to offshore rigs and supplies complete drilling rigs for onshore use.

In the first quarter, the Drilling Equipment division reported a turnover of NOK 336 million, a 62 percent increase compares to the first three months of 2008. Earnings before depreciation were a loss of NOK 56.9 million, compared to NOK 12.1 million in the first quarter last year. The decline in profit is related to the appropriation of NOK 72 million for potential losses on accounts receivable.

At the end of March 2009, the Drilling Equipment division reported an order backlog of NOK 799 million, a reduction of NOK 546 million compared to the same period in 2008. The reduction is due to cancelled orders for Ability Drilling. In the first quarter, TTS Sense Canada received an order for five land rigs from the Mexican company Maquinaia, Ingenieria y Proyectos del Puerto (MIPPSA) at a total value of NOK 320 million, and is awaiting final financing of the project, which will contribute positively to the division’s order situation.

Services Division
Effective as of 1 January 2009, TTS has organised its service and after sales support for all business areas into a separate division. The goal is to strengthen the group’s position as advisor and service provider following the delivery of new equipment.  

With regard to accounting, TTS’s companies in Vietnam, South Korea and USA constitute part of the Services division.

Still demanding, yet positive, outlook
- The financial crisis and ensuing crisis in the economic markets has had effects on TTS’ results. As a consequence of the strengthening of the company’s equity, we have laid the foundation for continued growth and development. We expect 2009 to be yet another record year for TTS with regard to turnover, while our result will be weaker than in 2008. We regard the prospects for 2010 to be good; both based on continued satisfactory sales development of ships equipment, and as the favourable development of the price of oil must be assumed to have a positive effect on our oil and gas related products and services, says Johannes D. Neteland, President and CEO.

About TTS Marine ASA
TTS Marine ASA is an international group that develops and supplies handling equipment for ships, ports and offshore oil and gas installations. As of 1 January 2009, operations are organised into the following six divisions: Dry Cargo Handling, Marine Cranes, Ports and Material Handling, Deck Machinery, Drilling Equipment and Services. The TTS Group is among the world’s leading suppliers within its market segments.

The TTS Group has around 1 300 employees (including associated companies), with a primary emphasis on engineering skills. The group has a total of 26 operative units in 12 countries; Norway, Sweden, Finland, Germany, the Czech Republic, Italy, China, USA, Canada, South Korea, Vietnam and Singapore.

TTS Marine ASA’s head office is located in Bergen, Norway, and the company is listed on the Oslo Stock Exchange. Johannes D. Neteland (51) has been President and CEO of TTS since 1998.

Contact:
Johannes D. Neteland, President & CEO   Tel.: +47 918 46 906
Mette Henriksen, Acting CFO   Tel.: +47 907 79 360