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Aker Solutions — Earnings Release 2016
Jul 13, 2016
3531_rns_2016-07-13_965434c5-7780-4327-9a47-26577a3d5950.html
Earnings Release
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Aker Solutions ASA: Second-Quarter Results 2016
Aker Solutions ASA: Second-Quarter Results 2016
July 13, 2016
Financial Highlights
* Sales NOK 7 billion in 2Q 2016 vs NOK 8 billion in 2Q 2015
* EBITDA NOK 563 million vs NOK 547 million a year earlier
* EBITDA margin 8.1% vs 6.8% a year earlier
* EBITDA margin ex. special items 8.5% vs 8.1% a year earlier
* EBIT NOK 319 million vs NOK 376 million a year earlier
* EBIT margin 4.6% vs 4.7% a year earlier
* EBIT margin ex. special items 5.7% vs 6% a year earlier
* Earnings per share NOK 0.37 vs NOK 0.73 a year earlier
* Order intake NOK 3.4 billion vs NOK 3.4 billion a year earlier
* Order backlog NOK 35 billion vs NOK 44 billion a year earlier
* Net debt NOK 1.3 billion vs NOK 1.8 billion a year earlier
Aker Solutions delivered on major projects globally in the second quarter as
operational improvements supported margins amid a slowdown for the oil and gas
industry.
The company won NOK 3.4 billion in orders in the period, including a contract of
more than NOK 1 billion to deliver its longest-ever umbilicals system at the
Zohr gas field offshore Egypt and an order from Idemitsu Oil and Gas for front
end engineering design at the Sao Vang and Dai Nguyet developments offshore
Vietnam. In Norway, the company secured an engineering framework agreement with
Lundin and MMO contracts with Statoil and Kværner. Aker Solutions saw continued
interest in its front end engineering capabilities, receiving 29 study awards
for projects in Norway, Australia, Asia Pacific and West Africa.
The order backlog was NOK 35 billion at the end of the quarter, of which almost
two-thirds were for projects outside Norway. Finances were robust, with a
liquidity buffer of 7.9 billion kroner at the end of the period. Net debt fell
to NOK 1.3 billion from NOK 1.8 billion a year earlier.
There was good progress on a goal to boost cost-efficiency across the business
by at least 30 percent amid a broader effort to streamline operations and
strengthen competitiveness. The plan is to achieve annual cost savings of
minimum NOK 9 billion by the end of next year, based on the 2015 cost base and
work volumes. The company expects a quarter of this target to be achieved this
year and for improvements to accelerate next year.
"In the shadow of extensive industry challenges, we continued to deliver on
operational improvements and our streamlining process," said Luis Araujo, chief
executive officer of Aker Solutions. "We have maintained steady margins and
delivered strong execution. Our healthy backlog and solid finances will stand us
well now and when the market recovers."
Revenue fell to NOK 7 billion in the quarter from NOK 8 billion a year earlier
as the oil-services market slowed and some projects neared completion. Earnings
before interest and taxes (EBIT) were NOK 319 million compared with NOK 376
million a year earlier. The EBIT margin was 4.6 percent versus 4.7 percent a
year earlier. The company had NOK 77 million in special items, mainly from costs
of restructuring and impairments. The margin excluding special items was 5.7
percent.
Aker Solutions has two reporting segments: Subsea and Field Design. Subsea
revenue fell to NOK 4.3 billion in the quarter from NOK 4.8 billion a year
earlier. The EBIT margin narrowed to 4.6 percent from 7.1 percent, impacted by
higher depreciation and lower subsea services demand. The margin excluding
special items was 6 percent.
Revenue in Field Design, which consists of MMO and Engineering, dropped to NOK
2.7 billion in the quarter from NOK 3.3 billion a year earlier. The decline was
led by MMO, where some major projects neared completion and volumes contributing
to revenue were small from other projects still in their start-up phase. The
EBIT margin widened to 5.5 percent in the quarter from 4.9 percent a year
earlier, helped by good progress on projects. The margin excluding special items
was 6.1 percent.
Outlook
The markets are challenging and projects are being postponed across the
industry. But cost cuts are driving down break-even costs, which may allow some
major developments to be sanctioned in the next 12-18 months. While offshore
Norway is largely expected to remain subdued, there are signs that the region
may start to see a gradual recovery from 2017. Aker Solutions' greatest growth
potential is outside of Norway, where the company has been expanding. Tendering
activity remains steady and totals about NOK 35 billion.
Aker Solutions is well-placed in key growth regions of the global deepwater and
subsea markets to provide the capabilities and technology to tackle the
challenges of lowering costs and improving recovery rates.
In Subsea, Aker Solutions targets a move over time toward peer-group margins and
a return on average capital employed (ROACE) of 20-25 percent in the medium
term. The ROACE in the second quarter was 10 percent and 15 percent excluding
special items. Margins in Field Design are expected to gradually improve, with
the biggest movement in MMO. The company expects to at least maintain its market
share in all business areas.
ENDS
For further information, please contact:
Media:
Bunny Nooryani, Chief Communications Officer, Aker Solutions. Tel:
+47 67 59 42 71, Mob: +47 480 27 575, E-mail: [email protected]
Anne Cecilie Lund-Andersen, Media Relations Manager, Aker Solutions. Tel:
+47 22 94 74 52, Mob: +47 99 62 12 13, E-mail: anne.cecilie.lund-
Investors:
David Phillips, Head of Industry & Investor Relations, Aker Solutions. Tel:
+44 208 811 7111, Mob: +44 7788 338 887, E-mail:
Per Christian Olsen, Analyst, Investor Relations, Aker Solutions. Tel:
+47 67 51 36 58, Mob: +47 900 29 077, E-mail:
Aker Solutions is a global provider of products, systems and services to the oil
and gas industry. Its engineering, design and technology bring discoveries into
production and maximize recovery. The company employs approximately 13,000
people in about 20 countries. Go to http://akersolutions.com for more
information on our business, people and values.
This press release may include forward-looking information or statements and is
subject to our disclaimer, see http://akersolutions.com
This information is subject of the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.
[HUG#2028213]