Aker Solutions — Earnings Release 2017

Jul 12, 2017

Aker Solutions ASA: Second-Quarter and Half-Year Results 2017

Aker Solutions ASA: Second-Quarter and Half-Year Results 2017

July 12, 2017

2Q 2017 Financial Highlights

* Sales NOK 5.4 billion

* EBITDA NOK 305 million

* EBITDA margin 5.6%

* EBITDA margin ex. special items 7.4%

* Earnings per share ex. special items NOK 0.35

* Order intake NOK 3 billion

* Order backlog NOK 30.7 billion

Aker Solutions delivered another period of strong execution on major projects

globally in the second quarter of 2017 and made good progress on improvement

efforts that supported margins.

The company secured NOK 3 billion in orders, including a contract to deliver

three umbilicals and equipment to ENI's Coral South project and an order from

Statoil for subsea equipment for Snefrid Nord in the Norwegian Sea. It won 41

study awards for front-end engineering, bringing the total in the first six

months of the year to 71 studies for projects in Norway, the UK, the U.S.,

Brazil, Australia and Malaysia. That compares with a record of more than 80

studies for all of 2016.

"We're seeing a surge in demand for our front-end engineering services, which

typically is an early indication of a pickup in activity ahead," said Luis

Araujo, chief executive officer of Aker Solutions. "We also benefited from

another quarter of strong execution and operational improvements that supported

margins amid continued industrywide challenges."

The company has completed more than 80 percent of a program aimed at increasing

cost effiency across the business by at least 30 percent by the end of 2017. It

is also benefiting from its more streamlined organizational structure of five

delivery centers, introduced in November last year.

The company made good progress in integrating acquisitions, including the

purchase in December of Brazilian maintenance and modifications provider, C.S.E.

Mecânica e Instrumentação Ltda. Aker Solutions in April also bought the

Norwegian oil and gas business of Reinertsen, Norway's third-largest offshore

maintenance and modifications supplier.

"We have moved swiftly to ensure a successful integration of these businesses

and this is already generating significant synergies while building on our

strategy to expand our projects and services businesses in major markets

internationally," said Araujo.

The order backlog was NOK 30.7 billion at the end of the quarter, of which about

half was for projects outside Norway. Finances were solid, with a liquidity

buffer of NOK 4.9 billion at the end of the period.

Revenue fell to NOK 5.4 billion in the quarter from NOK 7 billion a year earlier

amid the global market slowdown and as some projects neared completion. Earnings

before interest, taxes, depreciation and amortization (EBITDA) were NOK 305

million in the quarter, compared with NOK 563 million a year earlier. The EBITDA

margin was 5.6 percent versus 8.1 percent a year earlier. The company booked NOK

64 million in integration and restructuring costs related to the acquisition of

Reinertsen. Excluding these and other special items, the margin was 7.4 percent

compared with 8.5 percent a year earlier.

Aker Solutions has two reporting segments: Projects and Services. Revenue in

Projects declined to NOK 4.2 billion in the quarter from NOK 5.5 billion a year

earlier amid generally lower market activity and on some projects nearing

completion. The EBITDA margin contracted to 5 percent in the quarter from 7.5

percent a year earlier. Revenue in Services fell to NOK 1.2 billion in the

quarter from NOK 1.4 billion a year earlier, primarily driven by decreased

activity for subsea services and a maturing production asset services portfolio.

The EBITDA margin expanded to 12.5 percent in the quarter from 12 percent a year

earlier, helped by a favorable activity mix and strong operational performance.

Outlook

The outlook for oil services remains challenging as projects continue to be

postponed amid a volatile oil-price environment. There are some signs of a

recovery, particularly offshore Norway and in the brownfield segment where oil

companies are focusing on optimizing output from existing fields. Industry

efficiency improvements are bringing down break-even costs on developments,

which is expected to spur new investments and project sanctions this year.

Increased demand for front-end engineering services is also an early indication

of a pickup in activity. Tendering is healthy and Aker Solutions is bidding for

contracts totaling about NOK 60 billion. The majority of these are in the subsea

area, where the company anticipates several major greenfield projects to be

awarded in the next 12 months. While there is continued uncertainty, the signs

of improving brownfield activity and expectations of key subsea projects moving

forward bode well for 2018 and beyond.

The company continues to see overall revenue down by about 10-15 percent in

2017 from the prior year, with an anticipated modest pickup in the field design

segments of both Projects and Services while subsea volumes will be weaker. The

company maintains its outlook for full-year underlying EBITDA margins to narrow

slightly from first-quarter levels due to a continued market slowdown and a

changing revenue mix. This will be partially offset by a continued strong

momentum from the company's global improvement program.

ENDS

Media Contact:

Bunny Nooryani, tel: +47 67 59 42 71, mob: +47 480 27 575, e-mail:

bunny.nooryani@akersolutions.com

Investor Contact:

Per Christian Olsen, tel: +47 67 51 36 58, mob: +47 900 29 077, e-mail:

per.christian.olsen@akersolutions.com

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 14,000

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.