Strong Order Momentum Continues With Revenues Standing At €222 Million

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Today, GTT, a leader in the development of membrane containment systems for the storage and transportation of liquefied gases, reports its financial results for the first nine months of 2022.

Commenting on the results, Philippe Berterottière, Chairman and CEO of GTT, said: “With 134 LNG carrier orders, our core business during the first nine months of 2022 has broken all previous sales records, highlighting the continuation of particularly strong momentum. The surge in demand for LNG, particularly in Europe, is fuelling further demand for LNG carriers, underpinned by investment in liquefaction plants and increased construction capacity at shipyards.

In the LNG as fuel business, GTT booked 42 orders during the first nine months of 2022. While the high price of LNG in Europe could slow order intake in the short term, GTT is convinced of the relevance of its solutions and the potential of this activity over the medium and long term.

GTT maintains a tireless focus on R&D to meet its customers’ energy transition needs and the tightening requirements they face. Over the first nine months, we obtained numerous approvals from classification societies to develop new technologies in a wide range of fields, particularly in LNG as fuel, but also for the design of a hydrogen carrier and an innovative design for a three-tank LNG carrier.

From a financial perspective, Q3 2022 revenues were up 4.1% versus Q3 2021. As expected, nine-month 2022 revenues were down compared to the same period in 2021 due to an unfavourable base effect, which is gradually disappearing thanks to the strong order momentum.

In addition, the Group confirms its 2022 targets with results expected to reach the lower half of the initial target range, as announced in the first half results release.”

Business activity during the first nine months

– Continued momentum in LNG carrier orders

In the first nine months of 2022, GTT booked 134 orders for LNG carriers, including 46 in the third quarter, in line with the excellent sales momentum achieved in the first half of the year. Delivery is scheduled between Q3 2024 and Q2 2027. In particular, 58 orders for projects in Qatar were received during the first nine months.

– Dynamic order intake of LNG-powered vessels

In addition to the 38 orders for LNG-powered vessels received in the first half of 2022, four new orders were received in the third quarter of 2022, bringing the total to 42 orders for the first nine months. While the high price of LNG in Europe could slow order intake in the short term, GTT is convinced of the relevance of its solutions and the potential of this business over the medium and long term.

– New licensing agreements with Chinese shipyards 

In the third quarter of 2022, GTT signed two new Technical Assistance and Licensing Agreements (TALA), with the Yangzijiang Shipbuilding and China Merchants Heavy Industries shipyards for the construction of GTT membrane containment systems. This brings to five the number of construction sites now operating in China and contributes to increasing vessel construction capacity.

– Smart Shipping: new contract

In July, GTT signed a contract with Antarctica21, the world’s leading operator of fly and cruise expeditions to Antarctica, to install “GTT Digital” smart shipping solutions in its cutting-edge expedition vessel Magellan Explorer.

– €86 million State support for Hydrogen IPCEI1 project confirms the relevance of Elogen positioning

Following the selection by the European Commission of Elogen’s “gigafactory” project and the strengthening of its R&D division as part of the Hydrogen IPCEI, Elogen has been awarded a maximum of €86 million in subsidies by the French government. An agreement regarding this subsidy will shortly be signed with Bpifrance. For the record, the Elogen gigafactory will start production in 2025 with a production capacity of over 1 GW.

Furthermore, in July 2022, 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.

Finally, as previously announced, in the first half of 2022 Elogen entered into several international partnerships for the manufacture and sale of electrolysers for producing green hydrogen:

  • with HiFraser Group in Australia and New Zealand;
  • with Valmax Technology Corporation in South Korea;
  • with Charbone Hydrogène in North America.

Innovation: development of new technologies in a wide range of fields

In the first half of 2022, GTT received several approvals in principle from classification societies, including:

  • Bureau Veritas for a new LNG conversion concept for large-capacity container ships;
  • ClassNK for a new design of LNG fuel tank with 2 bar gauge pressure applicable to PCTC2 vessels as well as LNG-powered cruise ships;
  • DNV for an innovative LNG-powered PCTC vessel design;
  • Lloyd’s Register for GTT’s future NEXT1 containment system;
  • Bureau Veritas for Shear-Water, a ballast-free vessel concept for LNG bunkering and refuelling vessels.

In the third quarter of 2022, GTT obtained five new approvals in principle from:

  • DNV for a containment system enabling the transport of liquid hydrogen, as well as the concept for a hydrogen carrier vessel. Both approvals in principle were obtained in the framework of the cooperation agreement with Shell announced early 2022 and reflect the progress of this project;
  • Lloyd’s Register for a new digital solution named “POWER” designed to optimise transhipment operations between LNG carriers and floating units;
  • Bureau Veritas for the design of a LNG-powered and “NH3-ready” Very Large Crude Carrier;
  • Bureau Veritas and DNV for an innovative three-tank LNG carrier concept.

Order book at September 30, 2022

On January 1, 2022, GTT’s order book excluding LNG as fuel comprised 161 units, and subsequently changed as follows:

  • Deliveries completed: 21 LNG carriers, 4 ethane carriers, 1 FLNG;
  • Orders received: 134 LNG carriers.

At September 30, 2022, the order book excluding LNG as fuel stood at 269 units, breaking down as follows:

  • 250 LNG carriers;
  • 2 ethane carriers;
  • 2 FSUs;
  • 3 GBSs;
  • 12 onshore storage tanks. 

Regarding LNG as fuel, following the delivery of four vessels, and orders for 42 container ship tanks, the number of vessels in the order book stood at 70 units at September 30, 2022.

Evolution of consolidated revenues for the first nine months of 2022

(in thousands of euros) 9M 2021 9M 2022 Change
Revenues 240,025 222,037 -7.5%
       
Newbuilds 224,281 200,385 -10.7%
LNG carriers/VLEC 194,767 174,749 -10.3%
FSUs3 9,660 13,578 +40.6%
FSRUs4 8,054 nm
FLNGs5 2,202 1,218 -44.7%
Onshore storage tanks 1,468 4,680 +218.8%
GBSs6 2,521 3,303 +31.1%
LNG-powered vessels 5,610 2,857 -49.1%
Electrolysers 3,316 2,980 -10.1%
Services 12,428 18,672 +50.2%

Consolidated revenues for the first nine months of 2022 were €222.0 million, down 7.5% compared to the first nine months of 2021. The third quarter 2022 revenues amounted to €77.8 million, up 4.1% compared to the third quarter 2021.

  • Newbuild revenues totalled €200.4 million, down 10.7% compared with the first nine months of 2021, when the cycle was still at its peak.
    • Royalties amounted to €174.7 million from LNG and ethane carriers, €13.6 million from FSUs, €1.2 million from FLNGs, €4.7 million from onshore storage tanks and €3.3 million from GBSs.
    • LNG as fuel royalties (€2.9 million) were not yet impacted by the high order intake in 2021 and 2022.
  • Nine-month revenues from the Elogen electrolyser business amounted to €3.0 million, in a context of increasing commercial dynamic.
  • Revenues from services rose sharply, up 50.2% to €18.7 million, driven by growth in digital services and engineering studies mainly related to the conversion of LNG carriers into FSRUs.

Update on exposure to Russia

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-breaking LNG carriers currently being built at the Zvezda Shipbuilding Complex (Zvezda), as well as in the design of 3 GBSs7 currently under construction at Saren B.V.8 At October 1, 2022, revenues of €74 million have yet to be recognised by 2025 for ice-breaking LNG carriers, including €4 million in Q4 2022. Revenues of €12 million have yet to be recognised for 2027 for GBSs, including €1 million in Q4 2022.

Given the impact of international sanctions on LNG liquefaction projects in Russia, the continuation and successful execution of these contracts are still exposed to risks of postponement or cancellation. In particular, sanctions are still affecting Russian imports of certain products and equipment used in current projects, including the Zvezda project. Furthermore, as previously announced, in July Saren B.V. notified GTT of its intention to terminate the contract between them. The termination date has not yet been finally set. In this context, GTT continues to investigate solutions to ensure the proper implementation and integrity of its technology, in strict compliance with international sanctions.

As a reminder, other orders in progress in Asian shipyards for six ice-breaking LNG carriers and two FSUs9 are specifically intended for Russian Arctic projects. These projects are currently proceeding according to plan. At October 1, 2022, these orders represented total revenues of €31 million for GTT, to be recognized by 2024, including €7 million in Q4 2022.

Finally, eight conventional LNG carriers ordered by international shipowners, under construction in Asian shipyards, are intended for the Arctic LNG 2 project, but can operate in all types of conditions.

2022 outlook confirmed

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:

  • consolidated revenues of between €290 million and €320 million,
  • consolidated EBITDA of between €140 million and €170 million,
  • a dividend amount for the 2022 financial year at least equivalent to the 2021 dividend. 

Given delays in shipbuilding schedules for certain vessels during the first nine months of 2022, the Group confirms its forecast that revenues and EBITDA will reach the lower half of the ranges announced in February.

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.

 

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Source: GTT

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