Head Energy delivers solid revenue growth and improved profit margins for the first six months of 2018. A record-high orderbook provides good visibility for the second half and beyond.
Head Energy Group posts six-months revenues of mNOK 143,8, compared to mNOK 111,5 for the same period last year. A 29 percent organic revenue growth is notable, and similar growth levels may be expected for the rest of 2018.
Driven by higher volumes and efficient operations, EBIT-margins jumps to 4,5 percent in H1-18, up from 2,0 percent last year, and well ahead of budget.
At the end of June 2018, the orderbook reached mNOK 345, a new record, providing a solid fundament for further growth.
Robust demand in all segments combined with good operations
The first half revenue growth is driven by good market conditions and strong demand in all three market segments served by Head Energy: Oil & Gas, Offshore Wind and Onshore Infrastructure.
In Oil & Gas, Head Energy’s primary market in terms of volume, demand has really picked up during the past twelve months, after an extended period of detraction, driving Head Energy’s topline growth. With attractive frame agreements in place, combined with ambitious and skilled Engineering and Consulting teams in Bergen and Stavanger, Head Energy has been able to capitalize on the demand-surge and push up the profit margins in the right direction, albeit from low levels. H1-18 has been very busy for both the Consulting and Engineering divisions and Head Energy represents a total team of approximately 275 in Norway (permanent employees and project personnel).
Demand is also robust in Offshore Wind, and Head Energy’s Danish team has continued to expand the operations in terms of size, number of customers and frame agreements, and most notably, the quality of services delivered. In a relatively short time, Head Energy has captured a solid market position, serving many of the largest offshore wind operators or leasing equipment suppliers. Further growth in offshore wind may be expected, a segment with somewhat higher margins than Oil & Gas, as Head Energy is seeking to extend its offshore wind operations internationally. Currently, Head Energy muster a team of 30 in Denmark (permanent employees and project personnel).
Head Energy is relatively new in Onshore Infrastructure, but relevant frame agreements and experienced personnel have made an impressive start. Head Energy Infra has already become one of Head Energy’s most profitable units, due in part to a low cost-base, and delivers impressive revenue growth, well beyond expectations. As per June 30, Head Energy Infra boasts and orderbook of mNOK 36,4.
Key financial figures
Topline growth in all business areas gives scale effects. Combined with solid operational performance and good HSEQ-statistics, this explains the solid margin expansion compared to H1-17.
Outlook
As previously communicated, Head Energy hopes to deliver full-year 2018 revenues of mNOK 300 and EBIT-margins of at least 2,7 percent. These budget-targets should be within reach.
The longer-term – 2020-targets – are revenues of mNOK 500 and 5,0 percent EBIT-margin. The H1-18 performance, including the end-of-June orderbook, gives reason to remain optimistic with regards to reaching these targets.
Bergen, 7 August 2018
Nils Haukeland,
CFO Head Energy Group
About Head Energy
Head Energy Group serves customers in Oil & Gas, Offshore Wind and Onshore Infrastructure with Consulting and Engineering services and bespoke Solutions.