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UPDATE 1-Kvaerner warns of "fierce" competition after profit miss
May 7, 2013 / 5:57 AM / 4 years ago

UPDATE 1-Kvaerner warns of "fierce" competition after profit miss

* Operating profit NOK 87 mln vs NOK 103 mln forecast

* Sees competition from Asian firms, margin pressure

* Will focus on Arctic projects (Adds performance detail, outlook)

OSLO, May 7 (Reuters) - Norwegian industrial group Kvaerner , which builds heavy equipment like oil platforms, posted first-quarter earnings below expectations on Tuesday and warned of fierce competition, particularly from Asian firms.

Kvaerner, which lost several high profile contracts over the past year because of its high cost level, said operating profit fell 40 percent to 87 million crowns ($14.91 million), missing expectations for 103 million crowns.

Its prospects were also mixed, it said, after Australia’s Woodside Petroleum decided to shelve its $45 billion Browse LNG project, a key focus for Kvaerner’s topside business.

And its upstream business was suffering margin pressures in the early phase of projects, the firm said, predicting that its margin for the business segment will be lower this year than in normal periods.

The firm will now focus on Arctic projects, with prospects coming up in Russia, Canada and Alaska, it said.

“The interest for the Arctic regions is strong and growing, and Kvaerner holds a unique position within this market on a global level,” said Kvaerner.

For 2013, Kvaerner expects potential revenues in excess of 15 billion crowns, well above last year’s 10.7 billion, and already secured 11 billion crowns of work for 2014.

The company works on a relatively few number of large projects so its prospects are often guided by its performance in just one or two tenders.

$1 = 5.8369 Norwegian kroner Reporting by Balazs Koranyi; Editing by David Cowell

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