HMS Group issues the following trading statement ahead of the announcement of its annual results for the FY 2011, expected to be released at the end of April.
Overall order intake under management accounts amounted to Rub 23.2 bn (USD 750 mn). Although order intake over 2011 contracted by 21% in comparison with the previous year, the Group enjoyed 37% YoY order intake growth, net of a large ESPO-related contract amounted to Rub 12.4 bn that had been signed in the first half of 2010.
As a substitute of the contract coming to a close, the Group managed to conclude a number of agreements for a diversified range of projects with expected revenue of Rub 1-3 bn. Though the most part of the contracts have been signed in the 4Q 2011, we see low seasonality effect, with performance of the customers’ project cycle being the core reason for the timing. Together with several contracts that are close to signing, overall backlog comes to the level of the previous year that makes the Group well-positioned to deliver positive results in 2012.
Overview by business segments
The industrial pumps business segment designs, engineers, manufactures and supplies a diverse range of pumps and pump-based integrated solutions to customers in the oil and gas, power generation and water utilities sectors in Russia, the CIS and internationally. The business segment’s principal products include bare shaft pumps built to standard specifications, customized pumps and integrated solutions.
Order intake in industrial pumps business segment down by 67% YoY due to a high-base effect resulted from the massive ESPO-related contract obtained in 2010. Excluding the contract, order intake contracted by 10% on the back of lower activity in the nuclear and thermal power end-markets. However, pumps for oil refineries, households and metal and mining applications demonstrated positive dynamic over the year. Basically, a large number of contracts with expected revenue less than Rub 30 mn constituted backlog built up by the segment over 2011.
Oil & gas equipment
The oil and gas equipment business segment manufactures, installs and commissions modular pumping stations, automated metering equipment, oil, gas and water processing and preparation units and other equipment and systems for use primarily in oil extraction and transportation. The segment’s products are equipment packages and systems installed inside a self-contained, free-standing structure which can be transported on trailers and delivered to and installed on the customer’s site as a modular but fully integrated part of the customer’s technological process.
Order intake in the oil and gas equipment segment demonstrated impressive growth of 101% YoY and amounted to Rub 7,832 mn versus Rub 3,897 mn in the beginning of 2011. The upturn was primarily driven by several hefty contracts totaled Rub 3.7 bn for a project at an East Siberian oilfield, a delivery of automated group metering units and an equipment delivery for a turnkey project on the Srednebotuobinskoe oilfield. Due to peculiarities of customers’ project cycle, the conclusion of these contracts fell on the very end of the year and have been reported by the Group in January, 2012. The other part of the orders was represented by the contracts with expected revenue less than Rub 150 mn per contract.
EPC (Engineering, procurement and construction)
The engineering, procurement and construction (EPC) business segment provide project, design and construction works as well as overall project management, including on a turn-key basis, for customers in the oil and gas upstream, oil and gas transportation and water utilities sectors.
Order intake in the EPC segment rose by 93% from Rub 4,003 mn to 7,731 mn mainly due to significant contracts signed by the Group in the second half of 2011. Orders in the construction sub-segment grew by 108% from Rub 2,634 mn to Rub 5,478 mn while project and design orders up 65% from Rub 1,366 mn to Rub 2,252 mn.
A part of the turnkey project at the Srednebotuobinskoe oilfield, a broad range of engineering services at the major West-Siberian oilfield as well as construction of well-clusters on a gas field in the Yamalo Nenets Autonomous area totaled Rub 4.1 bn were among the largest contracts concluded by the Group over the year. The other part of the orders was represented by the contracts with expected revenue less than Rub 500 mn per contract.
Orders for aftermarket services of all business segments grew by 18% over 2011 from Rub 1,156 mn to Rub 1,364 mn.