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Aker Solutions — Earnings Release 2017
May 9, 2017
3531_rns_2017-05-09_a35a4486-4669-4bc3-b5ff-88a0444733ab.html
Earnings Release
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Aker Solutions ASA: First-Quarter Results 2017
Aker Solutions ASA: First-Quarter Results 2017
May 9, 2017
1Q 2017 Financial Highlights
* Sales NOK 5.2 billion
* EBITDA NOK 355 million
* EBITDA margin 6.9%
* EBITDA margin ex. special items 7%
* EBIT NOK 150 million
* EBIT margin 2.9%
* EBIT margin ex. special items 3%
* Earnings per share NOK 0.23
* Order intake NOK 4.6 billion
* Order backlog NOK 30.7 billion
Aker Solutions continued to deliver strong execution on major projects globally
in the first quarter of 2017 and made good progress on improvement efforts that
supported margins amid a sustained market slowdown.
The company has completed more than two-thirds of a program to increase cost-
efficiency across the business by at least 30 percent by the end of 2017. Its
new, more streamlined organizational structure of five delivery centers became
fully operational in the quarter.
Good progress was made in integrating the Brazilian maintenance and
modifications provider, C.S.E. Mecânica e Instrumentação Ltda., which Aker
Solutions acquired in December to expand its services business in key markets.
Building on this strategy, Aker Solutions in March also agreed to buy the
Norwegian oil and gas assets of Reinertsen, Norway's third-largest offshore
maintenance and modifications supplier. The transaction was completed in April.
"We delivered yet another quarter with strong execution and improvement efforts
that supported margins amid continued market challenges," said Luis Araujo,
chief executive officer of Aker Solutions. "We also seized further opportunities
to grow a world-class services business that will be well placed to take
advantage of a market recovery."
The company won NOK 4.6 billion in new orders in the quarter, including a front-
end engineering and design (FEED) contract from Statoil for the second phase of
the major Johan Sverdrup development and an order from Kvaerner to provide
engineering for upgrading Statoil's Njord A platform in Norway. New orders also
included a contract for the hook-up of the riser platform at the Johan Sverdrup
field and a FEED order from VNG Norge for the North Sea Pil & Bue development.
Aker Solutions continued to generate strong interest in its front-end
engineering capabilities, winning 30 study awards for projects in Norway, the
UK, the U.S., Australia and Malaysia. That is a continuation of the company's
record number of 80 studies for all of 2016.
"Our early-phase capabilities are playing a key role in bringing down costs and
maximizing the overall value of field developments for our customers," said
Araujo. "We're seeing an increasing tendency for our study and FEED work to be
more closely tied to the potential next stages of a project - that is, the
engineering, procurement and even construction and installation phases. This
puts us in a stronger position to secure future work at these projects."
The order backlog was NOK 30.7 billion at the end of the quarter, of which more
than half was for projects outside Norway. Finances were solid, with a liquidity
buffer of NOK 7 billion at the end of the period.
Revenue decreased to NOK 5.2 billion in the quarter from NOK 6.5 billion a year
earlier amid the global market slowdown and as some projects neared completion.
Earnings before interest, taxes, depreciation and amortization were NOK 355
million in the quarter, compared with NOK 508 million a year earlier. The EBITDA
margin was 6.9 percent versus 7.9 percent a year earlier. Excluding special
items, the margin was 7 percent compared with 8 percent.
Aker Solutions has two reporting segments: Projects and Services. Revenue in
Projects declined to NOK 4.1 billion in the quarter from NOK 5.1 billion a year
earlier amid generally lower market activity and on some projects nearing
completion. The EBITDA margin contracted to 6.6 percent from 7.5 percent a year
earlier.
Revenue in Services fell to NOK 1.1 billion in the quarter from NOK 1.5 billion
a year earlier, primarily driven by decreased activity for subsea services and a
maturing production asset services portfolio. The EBITDA margin improved to
14.2 percent in the quarter from 10.2 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 in the brownfield segment where oil companies are
focusing on optimizing output from existing fields. Industry cost cuts 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 ahead.
Tendering activity is healthy and Aker Solutions is currently bidding for
contracts totaling about NOK 50 billion. The majority of these are in the subsea
area, where the company anticipates several greenfield projects to be awarded in
the next 12 months.
"While we continue to face market uncertainty, the signs of improving brownfield
activity and expectations of key subsea projects moving forward bode well for
2018 activity levels," said Araujo.
As previously indicated, 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 activity in the field design segments of both Projects and Services
that will be offset by weaker subsea volumes. Underlying EBITDA margins are seen
slightly down from current levels due to a continued market slowdown and
changing revenue mix. This will be partially offset by a continued strong
momentum from the company's global improvement program.
ENDS
Media Contacts:
Bunny Nooryani, tel: +47 67 59 42 71, mob: +47 480 27 575, e-mail:
Stina Kildedal-Johannessen, tel: +47 55 22 28 00, mob: +47 934 12 301, e-mail:
Investor Contact:
Per Christian Olsen, 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 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.