President and CEO holds the opinion that pessimism has got the upper hand. 03.11.2008

According to our evaluation, the pessimism has got the upper hand as regards the prospect for the future for both Norwegian and international economies, states Johannes D. Neteland, President and CEO. He appeals to the authorities to curb the extreme volatility of the Norwegian krone.

– TTS, like most other global companies, has challenges connected to the financial crisis and reduced growth of the world economy. But the gap is so vast between the positive development we are experiencing, and the general picture being painted of the future development of the economy, that it is prudent to shout a warning. If we paint the situation black long enough, people in general will believe that the universe is in the process of depletion. As bad as this it is certainly not, Neteland emphasizes.

Neteland holds the opinion that the Norwegian authorities and Norges Bank (Norwegian State Bank) has had some success in reducing the consequences of the international financial crisis. But he is of the opinion that the endeavour to eliminate the fluctuations of the exchange rate of the Norwegian Krone has been too feeble. – It is a fact that weakening of the exchange rate of the Norwegian krone generally is positive for the export industry. But it is detrimental indeed that the value of the Norwegian krone in relation to the US dollar and euro fluctuates from one week to the other. A number of contracts have exchange rates fixed at given levels. If these contracts are cancelled, and the forward currency position consequently will have to be terminated, Norwegian companies risk considerable losses if the cancellation takes place at a point in time where the currency position is unfavourable. At present we experience this as the gravest challenge relating to the financial crisis, Neteland states.

In this instance, as in all business issues, it is stability and predictability of the external conditions that gives industry the best foundation to navigate through the turbulent times, CEO Neteland underlines.

Growth continues
The turnover of the TTS Group from January to the end of September amounted to MNOK 2 947, up 71 per cent compared to the same period in 2007.
Operating result amounted to MNOK 147.5, an increase of 31 per cent from last year. The order backlog have increased by MNOK 866 over the last
three months, and at present totals MNOK 9 096.

The growth in 2008 is considerably higher than expected, and growth will continue in 2009. We deliver satisfactory bottom line results, and we count on better margins in the future, states Neteland. He informs that TTS in the 3rd quarter has booked expenses amounting to MNOK 11 relating to financial and legal review (due diligence) in connection with an acquisition that could not be completed. – As regards the general operations, we have incurred extraordinary expenses relating to development and testing of a specialised engine for drilling operations, and provision has been made for loss stemming from future deliveries of hatch covers. Except for these items operation progresses satisfactorily.

Dry Cargo Handling Division
Through its activities in the Dry Cargo Handling division, TTS is a leading supplier of cargo handling systems for ships; side loading systems, Ro-Ro equipment, hatch covers and special equipment for  yachts and cruise ships.

The Dry Cargo Handling division had a turnover of MNOK 943 in the first nine months of 2008, an increase of 33 percent compared to the same period in 2007. Operating profit before depreciation was MNOK 66.2, compared to MNOK 72.1 following the first nine months of 2007. The decrease is caused by the provision for loss entered in the accounts  relating to several future contracts for hatch covers, where higher cost of transport and steel have been encountered. The share of such deliveries will diminish in the second part of 2009. As regards the margins for deliveries to Ro-Ro vessels and for other ships equipment, these remain excellent.

At the end of September, the Dry Cargo Handling Division reported an order backlog of MNOK 3 513. This is record high and an increase of 69 per cent from the same time in 2007 and 34 per cent since the start of 2008. These figures include 50 per cent of the order backlog of the joint venture company TTS Hua Hai Ships Equipment Co Ltd. of China. In general, the markets for the division’s products remain reasonably satisfactorily.

Marine Cranes Division
TTS’ Marine Cranes division develops and supplies marine cranes, and is the world’s leading supplier of hose handling cranes. The division is furthermore a major supplier of provision cranes and cargo cranes. For the offshore sector, the division delivers cranes and other handling equipment for vessels and installations related to drilling and production of oil and gas.

The Marine Cranes Division reported a turnover at the end of September of MNOK 797, an 85 per cent increase compared to the same period in 2007. Earnings before depreciation were MNOK 35.9, compared to MNOK 22.1 in the first nine months of 2007. The progression of results is in accordance with the expectation of improved margins during the second half of 2008.

At the end of September, the order backlog of the Marine Cranes Division was MNOK 2 794. This is a 58 per cent increase since 30 September 2007, and a 15 per cent increase since the start of the new year.

Port and Material Handling Division
The Port and Material Handling division supplies shipyard production systems and systems for handling of containers in ports. The division has reported a high order intake and improved results.

The division’s turnover as of the end of September was MNOK 237, which is at the same level as the year before. Earnings before depreciation were MNOK 16.5, compared to MNOK 14.8 nine months into 2007.

At the end of September, the order backlog of the Port and Material Handling division was MNOK 402. This is an all time high and entails an increase of 52 per cent since the end of the third quarter of 2007, and an increase of 86 per cent since the start of the new year. The market outlook for the division’s products remains excellent.

Deck Machinery Division
The Deck Machinery division supplies anchor handling and mooring winches for ships. This became a business segment for TTS about three years ago, following the acquisition of Kocks in Germany. Restructuring of operations have yielded exceptional results. 

Nine months into 2008, the division reported a turnover of MNOK 285, a 37 per cent increase compared to the same period of 2007. Earnings before depreciation were MNOK 25.2, compared to MNOK 3.5 nine months into 2007. 

The order backlog of the division at the end of September was MNOK 908. This is another all time high, and an increase of 58 per cent since the same time in 2007, and a 33 per cent increase since the start of the new year.

Drilling Equipment Division
TTS Marine AS established the Drilling Equipment division following its takeover of Sense EDM in May 2007. Since TTS became owner, the company has entered into contracts for the delivery of two complete “packages” consisting of equipment for jack-up rigs offshore. Furthermore, TTS Sense is schedule to deliver nine large drilling rigs and two smaller work-over rigs for onshore use to Ability Drilling ASA.  This delivery schedule has been delayed, but the first rig is now operative, and number two is ready for delivery.

As of the third quarter of 2008, the Drilling Equipment Division reported a turnover of MNOK 698 and earnings before depreciation of MNOK 33.4.The margins are negatively affected by the large land rigs, and during the third quarter extraordinary cost relating to development and testing of an engine dedicated to fully automated drilling operations has been incurred.

At the end of September, the Drilling Equipment division reported an order backlog of MNOK 1 479. This is a 47 per cent increase from the same time last year, and a 48 per cent increase since the start of 2008. In the third quarter, the division secured contracts for deliveries to a value of about MNOK 500.

Positive outlook
- We deliver healthy results in all five divisions, and our total growth in turnover and order backlog has been formidable. The trends in our markets indicate an even higher level of activity in 2009, and prospects of further increase in profits remain excellent, says Johannes D. Neteland, President and CEO of TTS.

TTS has during October performed a thorough review of the contract portfolio, in order to evaluate risk involved. Of our total order backlog in excess of BillionNOK 9 it is feasible that orders at the value MNOK 500-700 may be cancelled. Primarily this applies to hatch covers and cargo cranes for bulk carriers with a scheduled delivery in 2010 and 2011. For 2009 the uncertainty of the market situation appears limited. Our long range view concludes that a somewhat generally lower demand will result in positive influence on the cost of steel and components purchased from suppliers, and that cost of transport between the continents will become less, concludes Johannes D. Neteland.

About TTS Marine ASA
TTS Marine ASA is an international group that develops and supplies handling equipment for ships, ports and offshore oil and gas installations. Operations are organised into the following five divisions: Dry Cargo Handling, Marine Cranes, Ports and Material Handling, Deck Machinery and Drilling Equipment. The TTS Group is among the world’s leading suppliers within its market segments.

The TTS Group has around 1 300 employees (including associated companies), with a primary emphasis on engineering skills. The group has a total of 26 operative units in 12 countries; Norway, Sweden, Finland, Germany, the Czech Republic, Italy, China, USA, Canada, South Korea, Vietnam and Singapore.

TTS Marine ASA’s head office is located in Bergen, Norway, and the company is listed on the Oslo Stock Exchange. Johannes D. Neteland (50) has been President and CEO of TTS since 1998.

Contact:
President & CEO Johannes D. Neteland, TTS Marine ASA   
Phone: +47 55 94 74 02  Mobile: +47 918 46 906
Email: johannes.neteland@tts-marine.no

Financial Director Olav Bruåsdal, TTS Marine ASA    
Phone: +47 55 94 74 25  Mobile: +47 915 61 152
Email: olav.bruasdal@tts-marine.no