July 28, 2022 11:45 ET | Source: GTT GTT
H1 2022 results Strong financial results and new record order intake
Key figures for the first half of 2022
Paris – July 28, 2022. GTT, the technological expert in membrane containment systems used to transport and store liquefied gases, today announces its results for the first half of 2022.
Commenting on the results, Philippe Berterottière, Chairman and CEO of GTT, said: “With 88 orders for LNG carriers, our core business sales performance for the first half of 2022 beats our record for the whole of 2021, highlighting particularly strong momentum. Furthermore, the final investment decisions on new liquefaction plants taken in the second quarter, the expected ramp-up of LNG carrier orders from Qatar and increasing demand for LNG in Europe have confirmed the need for infrastructure and LNG carriers in the years to come.
The first half is also promising for LNG as fuel, with 38 orders already placed, well above last year’s level. In addition, the growing number of mid-sized container ships in our order book is evidence of our enlarged market share in this sector.
In order to meet the needs of the market, new shipyards have been marketing our technologies since the first half of the year.
GTT maintains a tireless focus on R&D to meet its customers’ energy transition needs and the increased requirements they face. During the first half, we obtained a number of approvals from classification bodies to develop new innovative technologies across a wide range of fields, notably for our future NEXT1 containment system and for designing a LH2 carrier as part of our partnership with Shell.
From a financial perspective, revenues for the first half of 2022 were, as expected, lower than for the first half of 2021. This decline is attributable to a base effect, as the first half of 2021 still benefitted from the excellent momentum experienced in 2020, whereas the first half of 2022 didn’t get the full impact of the high order intake in 2021 and 2022. It is worth noting that revenues increased by 11.5% between Q1 and Q2 2022. Margin levels achieved in the first half of 2022 are also lower than in H1 2021, due to lower revenues, partly offset by cost reductions.
As regards 2022 targets, in the second quarter the Group noted some delays in shipbuilding schedules, resulting in a postponement of revenue recognition. These delays have various reasons: supply difficulties related to sanctions, lockdowns and social movements in Asia. Given these delays, we are confirming our annual targets, but we now expect to be in the lower half of the range announced in February.
Furthermore, work on projects in which the Group is involved in Russia is continuing in compliance with the applicable sanction regimes. However, given the increasing impact of international sanctions on LNG liquefaction projects in Russia, the continuation and proper execution of these contracts are exposed to risks of postponement or cancellation.
However, the crisis has highlighted the global scale of gas demand, the need for European countries to achieve energy independence in respect of Russia and, more specifically, the strategic importance of maritime transport of LNG, GTT’s core business.”
- Record order intake for LNG carriers
In the first half of 2022, GTT booked 88 orders for LNG carriers, continuing the excellent sales momentum achieved in Q1 2022. Delivery is scheduled between Q3 2024 and Q2 2027. It should be noted that orders for projects in Qatar amounted to 24 vessels in the first half of the year.
- New record for fitting LNG-powered vessels
Following the record number of orders received in 2021 (27 vessels), GTT received 38 orders for LNG-powered vessels in the first half of 2022, confirming another record year in this segment. These orders were received from various Chinese and Korean shipyards on behalf of several major global ship-owners. Delivery of the vessels is scheduled between Q1 2024 and Q1 2026.
- Smart Shipping: flagship contract signed
GTT has signed a contract with a major player in the liquefied gas transport industry for GTT Digital to equip 30 vessels with Smart Shipping solutions. The contract includes the installation and activation of sensors, automatic data collection systems and smart software to manage and optimise the vessels’ energy and environmental performance. It also provides for the regular intervention of GTT Digital experts to carry out customised data analysis and produce dedicated operational reporting.
- Elogen reaches new key milestones in its development
Three key partnerships have been signed to facilitate Elogen’s international development:
On July 15, 2022, Elogen’s “gigafactory” and R&D reinforcement project was selected by the European Commission to form part of the Hydrogen IPCEI4. As a reminder, the Elogen “gigafactory” will start production in 2025 with a production capacity of 1 GW.
Finally, in July, Elogen was selected by Symbio to supply an electrolyser with an initial capacity of 2.5 MW for Symbio’s new fuel cell plant. This new contract represents an important milestone for Elogen, as it highlights the company’s ability to deploy its technologies on multi-megawatt capacities for large industrial projects.
Development of new technologies - GTT once again leading the way in number of patents filed
In 2021, for the third year in a row, GTT ranked first in the list of medium-sized companies filing patents published by the INPI. This ranking highlights GTT’s outstanding innovative momentum.
In the first half of 2022, GTT received numerous approvals from classification bodies:
On January 1, 2022, GTT’s order book excluding LNG as fuel comprised 161 units, and subsequently changed as follows:
At June 30, 2022, the order book excluding LNG as fuel stood at 229 units, breaking down as follows:
Regarding LNG as fuel, with the deliveries of two ultra-large container ships and orders for 38 container ships, the number of vessels in the order book stood at 68 units at June 30, 2022.
Change in consolidated revenues for the first half of 2022
Consolidated revenues for H1 2022 amounted to €144.2 million, down 12.7% versus H1 2021.
Analysis of first half 2022 consolidated income statement
Operating income before depreciation and amortisation of non-current assets (EBITDA) amounted to €79.7 million, down 17.4% versus H1 2021. The EBITDA margin on revenue evolved from 58.4% in H1 2021 to 55.3% in H1 2022. External expenses decreased by 5.9% versus H1 2021, mainly due to a 35.5% decrease in testing and research expenses. Personnel expenses rose 3.8%, mainly due to the increase in headcount in the subsidiaries.
First half operating income amounted to €75.9 million, down 18.2% from €92.9 million in H1 2021.
Net income decreased from €76.6 million in H1 2021 to €63.7 million in H1 2022, resulting in a reduction in the net margin from 46.3% to 44.2%.
The - €35.6 million change in cash at June 30, 2022 is mainly due to the temporary increase in trade receivables. At June 30, 2022, the Group had a positive net cash position of €168.2 million.
Work on projects in which the Group is involved in Russia is currently continuing in compliance with the applicable sanction regimes.
In Russia, the Group is involved in tank design for 15 ice-breaker LNG carriers currently being built at the Zvezda Shipbuilding Complex (Zvezda), as well as in the design of 3 GBSs currently under construction by Saren B.V.13 At July 1, 2022, €78 million of revenues has yet to be recognised in respect of the ice-breaker LNG carriers by 2025, including €11 million in 2022, while €13 million of revenues has yet to be recognised in respect of the GBSs by 2026, including €3 million in 2022.
Given the increasing impact of international sanctions on LNG liquefaction projects in Russia, the continuation and successful execution of these contracts are exposed to risks of postponement or cancellation. In particular, the Group notes that sanctions are affecting Russian imports of certain products and equipment used in current projects, including the Zvezda project. Furthermore, GTT was notified in July by Saren B.V. of its intention to terminate the contract between them. In this context, GTT is investigating solutions to ensure the proper implementation and integrity of its technology, in strict compliance with applicable international sanctions.
As a reminder, other orders in progress in Asian shipyards for six ice-breaker LNG carriers and two FSUs14 are specifically intended for Russian Arctic projects. To date, these projects are proceeding according to plan. At July 1, 2022, these orders represent for GTT a total of €38 million revenues to be recognised by 2023, including €17 million in 2022.
Finally, eight conventional LNG carriers ordered by international ship-owners, under construction in Asian shipyards, are intended for the Arctic LNG2 project, but can operate in all types of conditions.
In its 2021 annual results press release dated February 17, 2022, the Group issued the following targets for 2022, assuming no significant order deferrals or cancellations:
Given the first half delays in some shipbuilding schedules, the Group now expects these figures to reach the lower half of the ranges of revenues and EBITDA announced in February.
The crisis has also highlighted the global scale of gas demand, the need for European countries to achieve energy independence in respect of Russia and, more specifically, the strategic importance of maritime transport of LNG, GTT’s core business.
In the longer term, the Group should benefit from the current strong order momentum and expects to achieve significantly higher revenues and earnings from 2023 onwards versus 2022.
On July 28, 2022, the Board of Directors decided on the distribution of an interim dividend of €1.55 per share for the 2022 financial year, to be paid in cash according to the following schedule:
Philippe Berterottière, Chairman and Chief Executive Officer, and Virginie Aubagnac, Chief Financial Officer, will comment on GTT’s first half results and answer questions from the financial community during a webcast held, in English, on Friday, July 29, 2022, at 8:30 a.m. (Paris time).
This conference will be broadcast live on GTT’s website (www.gtt.fr/finance). To participate in the conference call, please dial one of the following numbers five to ten minutes before the start of the conference:
The presentation document will be available on the website on July 29, 2022 from 8:30 a.m.
GTT is the technological expert in membrane containment systems dedicated to the transport and storage of liquefied gases. For over 50 years, GTT has been designing and marketing advanced technologies for improved energy performance. GTT technologies combine operational efficiency and safety to equip LNG carriers, floating terminals, onshore storage tanks and multi-gas carriers. The Group also offers systems for the use of LNG as fuel, as well as a wide range of services, including digital solutions in the field of Smart Shipping. GTT also operates in the hydrogen sector through its subsidiary Elogen, which designs and assembles electrolysers for the production of green hydrogen.
GTT is listed on Euronext Paris, Compartment A (ISIN FR0011726835 Euronext Paris: GTT) and is notably included in SBF 120, Stoxx Europe 600 and MSCI Small Cap indices.
Investor Relations Contact information-financiere@gtt.fr / +33 1 30 23 20 87
Press Contact press@gtt.fr / +33 1 30 23 20 43
For further information, please consult www.gtt.fr/en.
The figures presented here are those customarily used and communicated to the markets by GTT. This message includes forward-looking information and statements. Such statements include financial projections and estimates, the assumptions on which they are based, as well as statements about projects, objectives and expectations regarding future operations, profits, or services, or future performance. Although GTT management believes that these forward-looking statements are reasonable, investors and GTT shareholders should be aware that such forward-looking information and statements are subject to many risks and uncertainties that are generally difficult to predict and beyond the control of GTT, and may cause results and developments to differ significantly from those expressed, implied or predicted in the forward-looking statements or information. Such risks include those explained or identified in the public documents filed by GTT with the French Financial Markets Authority (AMF – Autorité des Marchés Financiers), including those listed in the “Risk Factors” section of the GTT Registration Document filed with the AMF on April 25, 2022 and the half-year financial report released on July 28, 2022. Investors and GTT shareholders should note that if some or all of these risks are realised they may have a significant unfavourable impact on GTT.
Appendices (consolidated financial statements - IFRS 15)
Appendix 3: Consolidated cash flow statement
* Period: mid-2022 to mid-2031 (10 years). The Company points out that the number of new orders may see large-scale variations from one half-year to another and even from one year to another, without the fundamentals on which its business model is based being called into question.
1 Important Project of Common European Interest
2 Balance of Plant: electrical, piping and other mechanical installations. 3 Proton Exchange Membrane. 4 Important Project of Common European Interest.
5 PCTC: Pure Car and Truck Carriers 6 Floating Storage Unit 7 Floating Storage Regasification Unit 8 Floating Liquefied Natural Gas unit 9 Gravity Based Structures: underwater tanks
10 EBITDA corresponds to EBIT excluding depreciation and amortisation of non-current assets. 11 EBIT stands for Earnings Before Interest and Tax. 12 H1 2022 earnings per share was calculated based on the weighted average number of shares outstanding (excluding treasury shares), i.e. 36,887,043 shares. 13 Saren B.V. is a joint venture between Saipem and Rönesans.