Kentz Corporation Limited (the "Company")
Trading Update
London, 20 January 2012 - Kentz Corporation Limited (LSE: KENZ), the holding company of the Kentz engineering and construction group, announces the following pre-close trading update ahead of its results for the year ended 31 December 2011, due to be published on 26 March 2012.
· Revenues and profits for the full year 2011 marginally ahead of consensus expectations
· Record backlog of US$2.40 billion at the end of December 2011, up 50% from December 2010, underpinned by further new awards and natural growth on existing contracts
· Backlog at year-end included 60% of reimbursable service contracts with significant opportunity for continued natural growth during 2012
· In addition the pipeline of prospects sits at just over US$10 billion
· Further new contract awards and continued natural growth in Papua New Guinea has established area as growth opportunity
· The cash position remains strong at approximately US$223 million at end December, which supports continued growth, both organically and through acquisition
· Christian Brown announced as the successor to Hugh O'Donnell following his 12 years as Chief Executive
Hugh O'Donnell, Chief Executive of Kentz Group commented:
"2011 was another strong year for Kentz with growth in revenue, profit and backlog. We anticipate continued development in both our core and emerging markets such as Russia, Australia and Canada. Overall, the outlook is very positive, underpinned by the solid project pipeline of our core clients, which gives us confidence for 2012 and beyond."
Operational update
Engineering, Procurement and Construction (EPC)
Kentz is experiencing strong demand for EPC Management services, particularly in the Middle East. We were pleased in November to sign an EPCM framework agreement with Qatargas Operating Company Limited, in joint venture with Foster Wheeler. The agreement will be for an initial three year period, with an option to extend for a further two years, and builds on our strong relationship with Foster Wheeler to provide support to a long-standing client in the region.
On Gorgon, both the Construction Village and Telecoms contracts continue to progress well. Australia remains an area of significant development for Kentz. Work in the region accounts for 50% of our current backlog and we are confident that increased investment in our operations there will lead to securing further projects in 2012.
RNE, the South African supplier of engineering services that Kentz acquired in February 2011, has exceeded its revenue and profit targets for the year. Its addition reinforces the development and execution of several EPC projects underway in South Africa and in time should support the global operations of Kentz.
Construction
The Construction business experienced a significant increase in activity during 2011 with demand for Kentz's core discipline of electrical and instrumentation (E&I) construction remaining very buoyant. In the last quarter of 2011, we were awarded a significant contract for the Ma'adan Smelter Reduction Area E&I in Saudi Arabia.
Africa, Canada and Australasia continue to grow and the current pipeline of prospects includes some imminent opportunities in Mozambique and Australia. Following the award of the Gorgon MEI contract in July 2011, in joint venture with CB&I, the backlog has grown substantially and gives visibility in the order book up to 2015.
There are a substantial number of emerging opportunities in sub-Saharan Africa in oil, gas, metals and mining. The strength and longevity of Kentz's business in Southern Africa gives us confidence that we are well-positioned to capitalise on new projects in West and East Africa.
Technical Support Services
Kentz's Asset Enhancement Business continued to gain momentum in 2011 with long-term brownfield engineering service contracts awarded in the Middle East with RasGas and Oryx GTL. We anticipate further task orders to be awarded and growth within the Shell, Qatargas and RasGas call-off contracts.
The current prospects pipeline consists of a number of new, exciting projects particularly in Russia, Canada and Australasia. The award in 2011 of several contracts on Canadian oil sands projects provides a good foundation for Kentz to develop its business further in this market. Technical Support Services has also provided the entry strategy into Iraq and we see significant growth in opportunities with Lukoil and other key clients in this area.
We have recently been awarded two contracts at the ExxonMobil Hides Gas Plant in Papua New Guinea (PNG); in the last quarter of 2011 for construction services and at the start of 2012 for the drilling support base scope of work. Our operations in PNG are growing strongly and we anticipate additional scopes of work and expansion of our services in this market.
A number of mining and metals projects underway in Southern Africa are progressing well and will be moving into operational phase during 2012. We believe involvement in metals and mining projects globally hold significant upside for Kentz.
Cash Position
The Group's cash position remains strong and continues to provide a sound financial base from which to support our growth plans. Net cash at the end of December 2011 was approximately US$223 million, an increase of around US$45 million on the position at end June 2011.
Ends
A conference call for analysts and institutional investors to discuss the statement will be held at 09.00 GMT on 20 January 2012. Please use the following dial-in-details:
Telephone: +44 (0)1452 555 566
Conference ID: 40761704
For further information please contact:
Kentz Corporation Limited
Tel: +44 (0)20 3159 4003
Elizabeth Rous
Catríona Nugent
About Kentz
Kentz is a global engineering specialist solutions provider, which serves a blue chip client base primarily in the oil and gas, petrochemical and mining and metals sectors. It is listed on the London Stock Exchange (symbol: KENZ). In the year ending December 2010, the company generated revenues of $1.06 billion and profit before tax of $67.5 million.
Kentz has over 11,500 employees in 28 countries. Its three main business lines are; specialist engineering, procurement and construction (EPC) services, construction, and technical support services. It has a proven track record of delivering mechanical, electrical, controls and instrumentation engineering, construction and management services in some of the most remote locations on earth.
Please find further information on the Kentz website www.kentz.com
