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Aker Solutions — Earnings Release 2015
Feb 12, 2016
3531_rns_2016-02-12_2548e888-4462-4bb6-96c4-179864b3ecba.html
Earnings Release
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Aker Solutions ASA: Fourth-Quarter Results 2015
Aker Solutions ASA: Fourth-Quarter Results 2015
February 12, 2016
Financial Highlights
* Sales NOK 7.9 billion in 4Q 2015 vs NOK 9.2 billion in 4Q 2014
* EBITDA NOK 182 million vs NOK 786 million a year earlier
* EBITDA margin 2.3% vs 8.6% a year earlier
* EBITDA margin ex. one-off items 8.9% vs 9.6% a year earlier
* EBIT loss NOK 155 million vs EBIT NOK 557 million a year earlier
* EBIT margin -2% vs 6.1% a year earlier
* EBIT margin ex. one-off items 6.1% vs 7.9% a year earlier
* Loss per share NOK 0.83 vs earnings per share NOK 1.30 a year earlier
* Order intake NOK 6.4 billion vs NOK 6.2 billion a year earlier
* Order backlog NOK 40 billion vs NOK 48 billion a year earlier
* Net cash NOK 301 million vs net debt NOK 397 million a year earlier
Aker Solutions made good progress on major projects from Africa to Norway and
Brazil in the fourth quarter of 2015. Key deliveries included equipment to start
drilling in November at the Kaombo development in Angola and components to
enable first oil production in December at the Moho field in Congo.
The company won NOK 6.4 billion in orders in the quarter, up from NOK 6.2
billion a year earlier. These included a maintenance and modifications framework
contract with BP in Norway and a framework agreement for offshore engineering
and construction services in the UK North Sea. Aker Solutions saw strong demand
for its front end engineering capabilities, securing 35 study awards, including
for projects in Norway, Australia, Canada, the U.S. and Africa.
The order backlog was NOK 40 billion at the end of the quarter, more than two-
thirds of which was for projects to be delivered outside Norway, with the
biggest share in West Africa. The financial position was robust at the end of
the period, with a liquidity buffer of 9 billion kroner. The company had net
cash of NOK 301 million at the end of the quarter, compared with net debt of NOK
397 million a year earlier.
Aker Solutions made steady progress in the quarter on a global improvement
program to boost cost-efficiency by at least 30 percent.
"Our consistently strong execution is the result of a ceaseless focus on
improving operations and bringing down costs to the benefit of both customers
and shareholders," said Luis Araujo, chief executive officer of Aker Solutions.
"We have a healthy order backlog, strong financial position and international
presence that will benefit us even as our industry continues to face uncertainty
amid very challenging market conditions."
Revenue decreased to NOK 7.9 billion in the quarter from NOK 9.2 billion a year
earlier amid declining market activity, particularly in the North Sea. The
company posted a loss before interest and taxes of NOK 155 million, compared
with earnings before interest and taxes (EBIT) of NOK 557 million a year
earlier. The EBIT margin was minus 2 percent compared with 6.1 percent a year
earlier. The quarter was burdened by NOK 636 million in one-off costs, including
NOK 373 million in restructuring and capacity reduction costs and a provision of
NOK 114 million to cover lease costs on vacated office space. Excluding one-off
items, the margin was 6.1 percent in the quarter.
The company is streamlining both its MMO and subsea businesses to strengthen
operations and enhance competitiveness. These efforts are expected to yield
annual savings of 600 million kroner. As announced earlier, Aker Solutions may
reduce capacity in its Norwegian MMO business by an additional 900 positions
this year to adjust to market conditions. This would bring total reductions
since summer 2014 to about 25 percent of the global workforce, about three-
quarters of which are in the MMO and subsea businesses in Norway. Aker Solutions
will continue to be vigilant on capacity while protecting key competence.
Aker Solutions has two reporting segments: Subsea and Field Design. Subsea
revenue declined in the fourth quarter to NOK 4.8 billion from NOK 5.5 billion a
year earlier amid lower activity levels, particularly in the North Sea. The EBIT
margin narrowed to 1.5 percent from 7.6 percent, impacted by NOK 134 million in
costs of adjusting the workforce capacity and restructuring the global subsea
organization. Excluding one-off items the margin was 6.6 percent in the quarter.
Revenue in Field Design, which consists of MMO and Engineering, slipped to NOK
3.2 billion in the quarter from NOK 3.7 billion a year earlier. The EBIT margin
was minus 1.6 percent in the quarter, compared with 6 percent a year earlier,
impacted mainly by restructuring costs of NOK 220 million in MMO. Excluding one-
off items the margin was 6.4 percent in the quarter.
The board of directors proposes no dividend for 2015. While Aker Solutions had a
solid financial position at the end of last year, the board deems it prudent to
exercise caution amid the current uncertain market outlook. The company
maintains its policy of paying a dividend of 30-50 percent of net profit over
time.
Outlook
The markets are challenging and projects are being postponed across the
industry. But there are signs that cost-cutting efforts are having an effect as
break-even costs are coming down. This may allow some major developments to be
sanctioned in the next 12-18 months. With the exception of the North Sea Johan
Sverdrup project, activity offshore Norway is expected to remain subdued over
the next year. Aker Solutions' greatest growth potential is outside of Norway,
where the company has been expanding. The company's tendering activity remains
steady and currently totals about NOK 50 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. This compares with a ROACE of 15 percent in the fourth quarter. 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:
Lasse Torkildsen, Senior Advisor, Aker Solutions. Tel: +47 67 51 30 39, Mob:
+47 911 37 194, E-mail: [email protected]
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 15,000
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#1985733]