Gaztransport et Technigaz SA

PAR:GTT

Earnings Call Transcript 2018-Q1

[Marc Haestier, Chief Financial Officer]

Good evening, and welcome to this conference call on the activity for the first quarter of 2018 for GTT. Marc Haestier speaking, CFO; and on this call with me is [indiscernible] who's in charge of Investor Relations.I will start with the key highlights of the first quarter. The revenues for the first quarter of 2018 amounted to EUR 64.2 million, an increase of 12.4% compared to the first quarter of last year. The order book has seen very strong level of orders in this first quarter. We have received 11 new orders, 10 for LNG carriers and 1 FSRU. And there have also been deliveries of 17 LNG carriers in the quarter. So that makes an order book of 83 units, 65 LNG carriers, 13 FSRUs, 1 barge, 2 FLNGs and 2 onshore storage units.As regards to the new business, LNG as a fuel, we've had an order in the first quarter for a bunker ship, which brings the order book for LNG as a fuel to 10 units, the 9 ultra-large container ships, the order we received last year for CMA CGM and this bunker ship I just mentioned. Also on LNG as a fuel, we have also announced the completion of the test phase for a new product, which is called the LNG Brick.Now before commenting those numbers in some more detail, I will just give you a short update of the market. And clearly the trend of Asian LNG inflows has been very strong. It's growing, in fact, compared to 2017. We have here a graph showing the imports for January and February, the March data is yet not available. But we see, again, a very strong increase in demand from China, 58%. It's still growing for the reasons we have already discussed, before the coal to gas switch in China. And also in Japan, the slow start -- restart of the nuclear units. And China is the second LNG importer in Asia.Moving to the spot market and the chart rates. The chart rates have been decreasing in the first quarter, but still the growing trend which has been seen over the last 18 months is still there. There are some seasonal effects, but also the production -- LNG production stopped for 2 months at PNG LNG, which, of course -- additional available vessels in the Pacific area. So this is a kind of temporary issue. As far as liquefaction projects, a number are ready to be sanctioned in order, of course, to absorb the growth in demand. In particular, Fortuna FLNG, although it is late compared to the initial schedule, the FID is still planned for this year. Also interestingly, a number of projects have signed long-term SPAs, for example, Corpus Christi T3, train 3. We have a 25-year contract and a 15-year contract, which have been signed. Also I'm not sure how to pronounce this one, but Calcasieu Pass, also a 20-year contract. Mozambique LNG Area 1, also a contract signed new SPAs for EDF in particular. And the total SPAs of 5.1 million tons per annum versus a target of 8.1 million, which is required for the FID decision, so we are getting closer. There's been also the announcement of a reduced tax plan for LNG Canada, which will make -- the proposal will help making the project possible and decision should come in 2018.Short word about the LNG Brick. Those of you who have the slides in front of them, you see a picture of this unit, which is in fact a self-contained product which can be installed inside a ship. And is intended for medium-sized merchant vessels with tank capacities in the range of 1,000 to 300 cubic meters (sic) [ 3,000 cubic meters ]. So addressing the smaller-sized ships segment of the market. And the test phase was completed at the end of March.So now if we look at the consolidated revenues for the first quarter. As I mentioned, total revenues amount to EUR 64.2 million, an increase of 12.4% compared to the first quarter of last year. The revenues from royalties stood at EUR 61.5 million, an increase of almost 15%, mainly driven by LNG carriers, an increase of -- just short of 20%, of course, reflecting the orders received in 2017 and in this first quarter. The revenues for services were at EUR 2.6 million, down actually compared to the first quarter of last year. A slow start for the services business in the first quarter, not a representative of the full year. We have had a decrease in studies. And you remember that studies represent a sizable amount but can be very lumpy from one period to another. Supplier's approvals were also less than last year. And of course, we only have 2 months of Ascenz in these numbers.So that leads us to confirm our outlook for 2018. In terms of revenue, we estimate the revenues for 2018 in the range of EUR 235 million to EUR 250 million. And EBITDA, consolidated, estimated in a range of EUR 145 million to EUR 155 million. 2018 dividend amount at least equivalent to what we've paid in the previous year, 2015 -- years, 2015 to 2017. And for the following year, a payout of at least 80%. So this is the end of my presentation.But I will be happy to answer any questions you might have.

[Operator]

[Operator Instructions] We'll now take our first question from Guillaume Delaby from Societe Generale.

[Guillaume Delaby, Equity Analyst]

A quick question on the service division. Because I had -- I would have understood that Ascenz was a profitable company, or at least at breakeven. So given the employees currently working at Ascenz, I would have assumed that on a normalized basis, Ascenz could generate maybe $6 million to $7 million of revenue. Assuming -- so I do not understand exactly the number given the consolidation of 2 months of Ascenz. I do would like to know what -- I would also have assumed, I know it's very tiny numbers, but with the consolidation of Cryovision, GTT America, GTT Training, it means that the core service business is down -- is really dramatically down versus Q1 of 2017. So could you provide us some reassurance when you are saying that it is not representative of the full year service revenue? Because I'm really, really surprised by this number, to be honest.

[Marc Haestier, Chief Financial Officer]

Yes, Guill. Thank you for that question. I think your assumptions relating to Ascenz are globally not far off. Clearly the phasing of the year is maybe not exactly linear, so that is something we need to take into account. Clearly, I mentioned studies, and you know studies can be, again, very lumpy. And 1 or 2 studies' difference in the quarter is a large difference in the service revenues. So clearly, I can only state once again that this is not representative of the full year.

[Guillaume Delaby, Equity Analyst]

And regarding Cryovision and the other subsidiaries, have they been consolidated in Q1 2018?

[Marc Haestier, Chief Financial Officer]

Yes, yes.

[Guillaume Delaby, Equity Analyst]

Yes?

[Marc Haestier, Chief Financial Officer]

Yes, but the comparative figures also are there.

[Guillaume Delaby, Equity Analyst]

Okay, okay, okay. Were you guys -- because [ requestories ], but for -- if I remember correctly without them.

[Marc Haestier, Chief Financial Officer]

Yes.

[Operator]

[Operator Instructions] We'll now take our next question from Kevin Roger of Kepler Cheuvreux.

[Kevin Roger, Research Analyst]

One quick question on my side, please. If you can give us information related to the 10 LNGC that you secured in Q1? How many are related to project under construction? Meaning that you used to present a slide with a number of projects that you still expect to be a function related to project under construction. How many of those 10, sort of, are related to project under construction, please?

[Marc Haestier, Chief Financial Officer]

Okay. It is a mix in fact within those 10 ships. Some of them are -- I don't like the term, but speculative orders. Or at least, orders made in anticipation of either projects currently under construction or even future projects, which actually shows the strong dynamic since the beginning of this year on the ship owners' side. So we will provide certainly more details as a breakdown at half year. As you know, we provide information on the order book on a 6-month basis because, clearly, on a quarter it's difficult to make a pertinent analysis. But as we say, a majority of those ships were related to -- at the end of the day, were related to projects under construction, even if they are not clearly flagged in that respect.

[Kevin Roger, Research Analyst]

Okay. So the majority of the spend, this will come from project under construction with some speculative or there are some addition?

[Marc Haestier, Chief Financial Officer]

Yes.

[Operator]

It appears there are no further questions at this time. Mr. Haestier, I'd like to turn the conference back to you for any additional or closing remarks.

[Marc Haestier, Chief Financial Officer]

Well, if there are no additional questions, I will just have to thank you for your attention, and look forward to speaking to you in the future -- in the near future. Thank you very much.

[Operator]

Ladies and gentlemen, this concludes today's call. Thank you for your participation. You may now disconnect.