• GTT: H1 2023 financial results - Strong growth for revenues and earnings; continuation of good order intake momentum

    Source: Nasdaq GlobeNewswire / 27 Jul 2023 11:45:00   America/New_York

    H1 2023 financial results:
    Strong growth for revenues and earnings;
    continuation of good order intake momentum

    • High level of orders: 42 LNG carriers and 1 FLNG
    • Revenues: 177.8 million euros, EBITDA: 104.2 million euros
    • Confirmation of 2023 targets
    • Interim dividend of 1.85 euro per share, up 19.4% on the 2022 interim dividend

    Paris – July 27, 2023. GTT, the technological expert in membrane containment systems used to transport and store liquefied gases, today announces its results for the first half of the 2023 financial year.

    Commenting on the results, Philippe Berterottière, Chairman and CEO of GTT, said: “With a total of 42 orders for LNG carriers and one order for an FLNG unit, GTT's commercial performance in the first half of 2023 continues to be very strong, in the wake of an exceptional 2022. LNG demand remains particularly strong, as illustrated by the number of long-term sales and purchase agreements leading to numerous final investment decisions for new liquefaction plants and to additional needs for LNG carriers.

    The GTT Group is pursuing its continued R&D and innovation efforts, as evidenced by several new approvals obtained from classification societies during the first half of 2023, notably in the field of alternative fuels. Confirming its technological foothold in the hydrogen field, GTT also signed a new partnership agreement for the development of a concept for a very large-capacity LH2 carrier.

    From the financial point of view, revenues for the first half of 2023 show an increase of 23.3% compared with the same period of 2022, and earnings are rising steeply as the Group begins to benefit from the numerous orders received in 2021 and 2022. In view of the shipbuilding schedules, the Group therefore confirms its revenue and EBITDA forecasts for the whole of the 2023 financial year. We are also proposing an interim dividend of 1.85 euro, reflecting the Group's strong performance.” 

      
    Group business activity in H1 2023

    - Continued momentum in LNG carrier orders

    Following a record year in 2022 in terms of orders received, GTT booked 42 orders for LNG carriers in the first half of 2023. Their delivery is scheduled between the first quarter of 2026 and the fourth quarter of 2027.

    GTT also received an order for one FLNG unit, which will be delivered in the first quarter of 2027.

    - LNG as fuel

    In July 2023, GTT received an order from its partner, the Chinese shipyard Yangzijiang, to design the cryogenic tanks for ten LNG-powered ultra-large container ships. Delivery of these container ships is scheduled between the second quarter of 2026 and the first quarter of 2028.

    - Services for vessels in operation

    In May 2023, GTT signed a new Technical Service Agreement with the maritime transportation company Eastern Pacific Shipping and its subsidiary Coolco to support them with the maintenance and operation of a fleet of 33 vessels (24 LNG carriers, 6 ethane carriers and 3 container ships).

    - Digital: new contracts and new solutions

    In March 2023, Marorka signed an important contract with a major European maritime transportation company to install automatic data collection systems and intelligent software to manage and optimise energy and environmental performance on 30 container ships, with an option for a further 30 in 2024.

    In addition, GTT has been chosen by two major European LNG ship-owners to equip three vessels with its predictive maintenance solution, the “Sloshing Virtual Sensor”. This solution allows ship-owners and charterers to optimise tank maintenance, while complying with strict safety standards, improving operational flexibility and making substantial savings.

    In May 2023, Ascenz Marorka won two contracts with JOVO, a supplier of clean energy services based in China, to equip two LNG carriers with its Smart Shipping solution.

    Finally, in June 2023, Ascenz Marorka obtained a Type Approval certification by the classification society DNV for its Shaft Power Limitation (ShaPoLi1) solution for vessel propellers. This solution helps ship-owners and operators comply with the International Maritime Organization (IMO) regulations aimed at reducing greenhouse gas emissions and carbon intensity by 40% before 2030.

    - Elogen pursues its development

    In H1 2023, Elogen’s revenues2 rose by 26.2% to 2.2 million euros, compared with 1.7 million euros for the same period of 2022 (as a reminder, 2022 revenues amounted to 4.7 million euros). An acceleration of this revenue growth is expected in the second half of 2023. During the first half, EBITDA showed a controlled level of loss at -7.7 million euros, compared with -4.8 million euros in H1 2022 and -14.7 million euros for the 2022 financial year. The Group recalls that Elogen's EBITDA is anticipated to reach breakeven from mid-decade.

    From the commercial point of view, Elogen is continuing to implement its selective approach to projects, while showing good sales momentum. Its order book stood at 20.3 million euros at June 30, 2023. This is 3.5 times higher than the order book at June 30, 2022 (5.9 million euros).

    During the first half of the year, Elogen secured a flagship contract with CrossWind3, a joint venture between Shell and Eneco, to build a 2.5 MW PEM electrolyser for an offshore wind farm off the Netherlands coast.

    In July 2023, Elogen signed its first contract with its Korean partner Valmax, for the construction of an electrolyser with a power of 2.5 MW. With a production capacity of up to one tonne of hydrogen per day, this electrolyser will be integrated into a mobility project.

    In parallel with cost management and a selective commercial approach, Elogen is pursuing the implementation of its strategy around three imperatives: “Be efficient, be reliable, be ready”. Within this framework, Elogen is developing its R&D activities to improve the competitiveness and energy efficiency of its solutions, diversifying its technologies to produce large-scale electrolysers, and continuing the development of its network of local partners for Balance-Of-Plant assembly and maintenance. The company is also strengthening its technical and project management teams. Last but not least, Elogen is gearing up for its Vendôme gigafactory project (part of the IPCEI Hydrogen program).

    - Development of new technologies

    Innovations in the field of LNG carriers

    As a reminder, in the first quarter of 2023, GTT received approval in principle from the classification society Lloyd’s Register for a maintenance optimisation solution for LNG membrane tanks, called Sloshing Virtual Sensor.

    In addition, GTT and Samsung Heavy Industries received approval in principle from Lloyd’s Register for a new LNG carrier design, incorporating the three-tank concept developed by GTT and equipped with the Mark III Flex membrane containment system. This approval is the result of a joint development project initiated in 2022, aimed at designing a new generation of LNG carriers.

    Innovations in the field of LNG fuelled vessels / alternative fuels

    In March 2023, GTT received four approvals in principle from the Japanese classification society ClassNK for its latest alternative fuel development projects, namely:

    • a 12,500 m3 dual-fuel VLCC4, equipped with the GTT Mark III Flex system;
    • an LNG tank rated “NH3 Ready”5, which includes NH3-compatible materials, risk assessment and gas boil-off rate management;
    • an 8,000 CEU6 dual-fuel PCTC7 rated “NH3 Ready”;
    • the RecycoolTM system, applied to LNG-powered vessels, which reliquefies excess boil-off gas to reduce greenhouse gas emissions and improve economic performance.

    In May 2023, GTT received an approval in principle from Bureau Veritas for the design of a dual-fuel Very Large Crude Carrier (VLCC) fuelled with LNG, in the context of a joint development project between Shanghai Waigaiqiao Shipyard, a world-renowned and leader shipyard in the construction of tankers, and Bureau Veritas.

    In June 2023, GTT received three approvals in principle from DNV for its latest development projects in alternative fuels, namely:

    • A concept for an LNG dual-fuel Suezmax tanker developed in collaboration with Deltamarin, fitted with a LNG fuel tank of 5,500 m3 equipped with GTT’s Mark III system;
    • A concept for an LNG dual-fuel Very Large Crude Carrier (VLCC) also developed with the support of Deltamarin, fitted with a LNG fuel tank of 12,500 m3 equipped with GTT’s Mark III system;
    • A concept for a Mark III LNG fuel tank with NH3 Ready notation that includes material compatibility with NH3, risk assessment and boil-off gas management.

    The Group also obtained a 4.66 million euro subsidy from Bpifrance for the design of an onboard CO2 capture system for vessels and the development of intelligent operational performance solutions by OSE Engineering8 (GTT Group) as part of the MerVent project.

    Developments in the field of liquid hydrogen (LH2) transportation

    In April 2023, GTT, TotalEnergies, LMG Marin and Bureau Veritas signed an agreement for a joint development project aimed at developing a concept for a LH2 carrier with a capacity of 150,000 m3, equipped with GTT’s membrane containment system.

    In July 2023, GTT received an approval in principle from ClassNK for a new concept of membrane type containment system for LH2.

    - CSR strategy

    The GTT Group’s CSR strategy is based on three key pillars:

    1. Sustainability starts with us, with priority given to safety, promotion of gender equality, talent retention, and the ongoing anti-corruption efforts.
    2. Environmental challenges are a driver of innovation: the Group’s R&D is increasingly focused on zero-carbon solutions, in line with the decarbonisation strategy.
    3. GTT is a responsible company, committed to significantly reducing its emissions.

    In this context, on March 13, 2023, GTT announced that it had joined the United Nations Global Compact, thereby committing itself to promoting the “Ten Principles” on human rights, labour standards, the environment and anti-corruption, and to implementing the 17 Sustainable Development Goals (SDGs)9 in its environmental, social and governance policy.

    By the end of 2023, the Group will complete the work of establishing a detailed roadmap for its CSR strategy.

    Order book at June 30, 202310

    On January 1, 2023, GTT’s order book excluding LNG as fuel comprised 274 units. It has since changed as follows:

    • Deliveries completed: 11 LNG carriers, 2 ethane carriers, 2 FSU;
    • Orders received: 42 LNG carriers, 1 FLNG

    At June 30, 2023, the order book excluding LNG as fuel stood at 302 units, breaking down as follows:

    • 287 LNG carriers;
    • 2 ethane carriers;
    • 1 FSRU;
    • 1 FLNG;
    • 11 onshore storage tanks.

    Regarding LNG as fuel, with the delivery of one vessel, there were 69 vessels in the order book at June 30, 2023.

        
    Change in consolidated revenues for the first half of 2023

    (in thousands of euros) H1 2022 H1 2023 Change
    Revenues 144,223 177,800 +23.3%
           
    New builds 130,656 163,530 +25.2%
    LNG carriers/ethane carriers 112,704 147,158 +30.6%
    FSU11 10,202 2,422 -76.3%
    FSRU12 - - N/A
    FLNG13 1,218 - -100.0%
    Onshore storage tanks and GBSs14 5,408 2,468 -54.4%
    LNG-powered vessels 1,124 11,482 +921.8%
    Electrolysers 1,723 2,174 +26.2%
    Services 11,844 12,096 +2.1%

    Consolidated revenues for the first half of 2023 amounted to 177.8 million euros, up 23.3% compared to the first half of 2022.

    • Newbuild revenues amounted to 163.5 million euros, up 25.2% compared with the first half of 2022.
      • Royalties from LNG and ethane carriers amounted to 147.2 million euros, up 30.6%. This rise is linked to the progressive increase in the number of LNG carriers under construction, thus generating additional income. Royalties from FSUs amounted to 2.4 million euros, down 76.3%, with the second and last FSU on order having been delivered during Q2, while royalties from onshore storage tanks and GBSs amounted to 2.5 million euros (-54.4%).
      • Royalties generated by the LNG as fuel business are rising sharply (+921.8% to 11.5 million euros), benefiting from the large number of orders received in 2021 and 2022.
    • Elogen’s revenues amounted to 2.2 million euros in the first half of 2023, up 26.2% compared with 1.7 million euros in the first half of 2022. The Group anticipates an acceleration of revenue growth in the second half of the year.
    • Revenues from services were up by 2.1% at 12.1 million euros in the first half of 2023, with income from assistance services for vessels in operation and increase in Ascenz Marorka activity more than offsetting the decrease in pre-project studies, for which demand is fluctuating by nature.

     Analysis of the H1 2023 consolidated income statement

    Summary consolidated income statement

    (in thousands of euros, except earnings per share) H1 2022 H1 2023 Change
    Revenues 144,223 177,800 +23.3%
    Operating income before depreciation and amortisation of non-current assets (EBITDA15) 79,706 104,195 +30.7%
    EBITDA margin (on revenues, %) 55.3% 58.6%  
    Operating income (EBIT16) 75,937 99,617 +31.2%
    EBIT margin (on revenue, %) 52.7% 56.0%  
    Net income 63,692 84,027 +31.9%
    Net margin (on revenues, %) 44.2% 47.3%  
    Net earnings per share17 (in euros) 1.73 2.28  

    Operating income before depreciation and amortisation of non-current assets (EBITDA) amounted to 104.2 million euros in the first half of 2023, up 30.7% compared with H1 2022, benefiting from the increase in revenues and non-recurring items (including a write-back of the KFTC fine provision of 8.1 million euros). The EBITDA margin on revenue stood at 58.6% in H1 2023, compared with 55.3% in H1 2022. External expenses were up 30.3% compared with the previous half-year, due in particular to the rise in subcontracting and travel costs linked to the increase in activity. Personnel expenses were up by 20.8%, reflecting the increase in headcount in the subsidiaries (Elogen, OSE Engineering, GTT China) as well as the overhaul of the compensation scheme (rebalancing between collective and individual components, adjustment of certain remuneration packages to the benchmark) which takes into account the impact of inflation.

    Operating income amounted to 99.6 million euros in the first half of 2023 compared to 75.9 million euros in the first half of 2022, an increase of 31.2%.

    Net income amounted to 84.0 million euros in the first half of 2023, compared with 63.7 million euros in H1 2022, representing an increase of 31.9%. The net margin was 47.3% compared with 44.2% in H1 2022.

    Other consolidated financial data

    (in thousands of euros) H1 2022 H1 2023
    Capital expenditure (including acquisitions of non-current assets) (8,340) (12,668)
    Dividends paid (64,553) (57,277)
    Cash position 168,242 253,201
    Change in cash (vs. 12/31) -35,563 +40,399

    The change in cash of +40.4 million euros at June 30, 2023 mainly reflects the increase in deferred income (due to a larger number of vessels in the beginning of construction). At June 30, 2023, the Group had a positive net cash position of 253.2 million euros.

    KFTC

    The Group recalls that by its decision of April 13, 2023, the Supreme Court of Korea rejected the appeal filed by GTT in December 2022 against the decision of the Seoul High Court. This decision confirmed the Company’s obligation to separate, in whole or in part, the licensing from the technical assistance if so requested by the Korean shipyards.

    GTT considers that technical assistance and engineering services are essential to the safety and performance of its solutions.

    The Group specifies that the fine paid at the beginning of 2021 to the KFTC has been reimbursed to GTT and that it has not received, to date, any request from the shipyards to renegotiate the contracts.

    2023 targets confirmed

    At June 30, 2023, the Group benefits from greater visibility on its royalty revenues18 than at December 31, 2022, thanks to the order backlog in its core business. This corresponds to revenues of 1,790 million euros over the period 2023-202719 (compared with 1,594 million euros at December 31, 2022), broken down as follows: 343 million euros in 202319, 529 million euros in 2024, 600 million euros in 2025, 372 million euros in 2026 and 98 million euros in 2027.

    In addition, the Group anticipates an acceleration of its core business revenues during the second half of 2023, due to the growing number of vessels under construction.

    In this context and in the absence of any significant order delays or cancellations, GTT confirms its targets for the 2023 financial year, namely:

    • 2023 consolidated revenues of between 385 million euros and 430 million euros,
    • 2023 consolidated EBITDA of between 190 million euros and 235 million euros,
    • the distribution of a dividend for the 2023 financial year corresponding to a minimum payout ratio of 80% of consolidated net income20.
       

    Interim dividend

    On July 27, 2023, the Board of Directors decided on the distribution of an interim dividend of 1.85 euro per share for the 2023 financial year, to be paid in cash according to the following schedule:

    • December 12, 2023: ex-dividend date
    • December 14, 2023: payment date

    ***

    Presentation of the H1 2023 financial results

    Philippe Berterottière, Chairman and Chief Executive Officer, and Virginie Aubagnac, Chief Financial Officer, will comment on GTT’s 2023 half-year results and answer questions from the financial community during a webcast held, in English, on Friday, July 28, 2023, 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:

    • France: + 33 1 70 91 87 04
    • UK: +44 1 212 818 004
    • USA: +1 718 705 87 96

    Confirmation code: 140215

    The presentation document will be available on the Company’s website on July 28 from 8:30 a.m.

    Financial agenda

    • 2023 third-quarter results: October 25, 2023 (after close of trading)
    • Payment of an interim dividend of 1.85 euro per share for the 2023 financial year: December 14, 2023

    About GTT
    GTT is a technological expert in containment systems with cryogenic membranes used to transport and store liquefied gases. For over 50 years, GTT has been designing and providing cutting-edge technologies for a better energy performance, which combine operational efficiency and safety, to equip LNG carriers, floating terminals, land storage, and multi-gas carriers. GTT also develops systems dedicated to the use of LNG as fuel, as well as a full range of services, including digital services in the field of Smart Shipping. The Group is also active in hydrogen through its subsidiary Elogen, which designs and assembles electrolysers notably 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 6 31 62 23 48 
    For more information, visit www.gtt.fr.

    Important notice

    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 Universal 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 1: Consolidated balance sheet

    In thousands of euros December 31, 2022 June 30, 2023
    Intangible assets 18,493 22,527
    Goodwill 15,365 15,365
    Property, plant and equipment 34,051 38,325
    Non-current financial assets 6,935 6,632
    Deferred tax assets 5,377 5,513
    Non-current assets 80,221 88,361
    Inventories 13,603 16,773
    Trade receivables 117,936 122,319
    Current tax receivable 40,110 54,085
    Other current assets 19,729 12,231
    Current financial assets 44 118
    Cash and cash equivalents 212,803 253,201
    Current assets 404,224 458,727
    TOTAL ASSETS 484,445 547,088


    In thousands of euros December 31, 2022 June 30, 2023
    Share capital 371 371
    Share premium 2,932 2,932
    Treasury shares (10,818) (9,136)
    Reserves 139,049 208,693
    Net income 128,260 84,004
    Equity - Group Share 259,794 286,864
    Total equity - share attributable to non-controlling interests 41 44
    Total equity 259,835 286,908
    Non-current provisions 13,499 5,630
    Financial liabilities - non-current part 3,586 7,683
    Deferred tax liabilities 52 41
    Non-current liabilities 17,137 13,354
    Current provisions 8,151 9,085
    Trade payables 23,765 22,919
    Current tax payable 13,833 9,201
    Current financial liabilities 6,465 5,633
    Other current liabilities 460 1,019
    Current provisions 154,799 198,969
    Current liabilities 207,473 246,826
    TOTAL EQUITY AND LIABILITIES 484,445 547,088

    Appendix 2: Consolidated income statement

    In thousands of euros H1 2022 H1 2023
    Revenues from operating activities 144,223 177,800
    Other operating revenues 735 188
    Total operating revenues 144,958 177,988
    Costs of sales (5,957) (5,558)
    External expenses (28,757) (37,460)
    Personnel expenses (34,590) (41,775)
    Tax and duties (1,925) (1,876)
    Depreciation, amortisation and provisions (838) 6,296
    Other operating income and expenses 3,046 2,001
    Operating income 75,937 99,617
    Financial income 330 896
    Share of earnings of associates - (135)
    Earnings before tax 76,267 100,378
    Income tax (12,575) (16,351)
    Net income 63,692 84,027
    Basic earnings per share (in euros) 1.73 2.28

    Appendix 3: Consolidated cash flow statement

    In thousands of euros 30 June 2022 30 June 2023
    Company profit for the year 63,692 84,027
    Removal of income and expenses with no cash impact:    
    Share of net income of equity-accounted companies   135
    Allocations (reversals) to depreciation, amortisation, provisions and impairments 1,019 (2,144)
    Net carrying amount of assigned intangible assets and property, plant and equipment 53 -
    Financial expenses (income) (330) (896)
    Tax expense (income) for the financial year 12,575 16,351
    Free shares 1,409 475
    Cash flow 78,418 97,948
    Tax paid out in the financial year 3,190 (31,547)
    Change in working capital requirement:    
    - Inventories and works in progress (2,116) (3,170)
    - Trade and other receivables (33,241) (4,170)
    - Trade and other payables (2,147) (1,057)
    - Other operating assets and liabilities (7,054) 51,888
    Net cash-flow generated by the business (Total I) 37,050 109,891
    Investment operations    
    Acquisition of non-current assets (8,340) (12,668)
    Investment subsidy - (4,632)
    Disposal of non-current assets - (1)
    Control acquired on subsidiaries net of cash and cash equivalents acquired - 0
    Control lost on subsidiaries net of cash and cash equivalents sold - -
    Financial investments (2,135) (128)
    Disposal of financial assets - -
    Treasury shares 26 (216)
    Change in other fixed financial assets 2,147 1
    Net cash-flow from investment operations (Total II) (8,302) (17,644)
    Financing operations    
    Dividends paid to shareholders (64,553) (57,277)
    Capital increase (32) (0)
    Debt repayment (343) (835)
    Increase in debt levels 34 5,492
    Interest paid 19 (37)
    Interest received 36 1,834
    Net cash from (used in) financing activities (Total III) (64,839) (50,823)
    Effect of changes in currency prices (IV) 529 (1,025)
    Cash change (I+II+III+IV) (35,562) 40,399
    Opening cash 203,804 212,802
    Closing cash 168,242 253,201
    Cash change (35,562) 40,399

    Appendix 4: 10 year order estimates

    In units   Order estimates(1)
    LNG carriers   400-450
    Ethane carriers   25-40
    FSRUs   <10
    FLNGs   5
    Onshore storage tanks and GBSs   25-30

    (1) Period: mid-2023 to mid-2032 (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 ShaPoLi: Shaft Power Limitation.
    2 Excluding subsidies
    3 See the Elogen press release of 02/07/2023.
    4 VLCC: Very large crude carrier.
    5 NH3 Ready: compatible with ammonia.
    6 PCTC: Pure Car and Truck Carrier – carriers of light vehicles, trucks and rolling stock.
    7 CEU: Car Equivalent Unit – measure of a PCTC’s freight capacity.
    8 More information on site: https://www.ose-engineering.fr/en/
    9 More information on the 17 SDGs: https://unglobalcompact.org/sdgs/17-global-goals
    10 Excluding orders linked to activities in Russia
    11 Floating storage units.
    12 Floating storage regasification units.
    13 Floating Liquefied Natural Gas vessel
    14 Gravity Based Structures: underwater tanks.
    15 EBITDA corresponds to EBIT excluding depreciation and amortisation of non-current assets.
    16 EBIT stands for Earnings Before Interest and Tax.
    17 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. 
    18 Royalties from core activities, i.e. excluding LNG as fuel and services
    19 Including152 millions euros accounted in H1 2023.
    20 Subject to approval by the Shareholders’ Meeting and the amount of distributable net income in the GTT S.A. corporate financial statements.

     

    Attachment


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