Aker Solutions — Earnings Release 2020

Apr 30, 2020

Aker Solutions ASA: First-Quarter Results 2020

Aker Solutions ASA: First-Quarter Results 2020

April 30, 2020 - Aker Solutions reported first-quarter revenue of NOK 6.5

billion, a decline of 10 percent compared with the first quarter 2019, as the

impact of the COVID-19 outbreak and sharp decline in oil prices impacted

activity levels.

1Q 2020 Financial Highlights

· Revenue NOK 6.5 billion

· EBITDA NOK 149 million

· EBITDA margin 2.3%

· EBITDA ex. special items NOK 314 million

· EBITDA margin ex. special items 4.8%

· Order intake NOK 6.6 billion

· Order backlog NOK 26.4 billion

The results were impacted by lower activity levels towards the end of the

quarter, as operators postponed offshore work to mitigate the spread of the

coronavirus. The impact of the COVID-19 pandemic and the sharp drop in oil

prices caused significant disruption to the global economy during the quarter.

The global energy sector was hit particularly hard, as commodity prices

collapsed and operators significantly reduced spending plans.

"Under these extreme and unprecedented circumstances, after protecting the

health and safety of our people, our focus is to safeguard the financial

strength of our company," said Luis Araujo, chief executive officer of Aker

Solutions. "At Aker Solutions actions have been implemented to address the

situation. We are doing our utmost to mitigate the effects for employees,

customers, shareholders and other stakeholders around the world."

Orders totaled NOK 6.6 billion in the quarter, bringing the backlog to NOK 26.4

billion. Key awards included a five-year agreement to provide brownfield

services to Brunei Shell Petroleum, to maintain production levels for more than

200 offshore assets. During the quarter, Aker Solutions also signed a 20-year

exclusive master agreement to provide umbilicals for Chevron-operated oil and

gas fields in the Gulf of Mexico. The company also secured the first work order

under the new agreement, to provide umbilicals for Chevron's Anchor project.

Revenue and EBITDA

Revenue fell to NOK 6.5 billion in the quarter from NOK 7.3 billion a year

earlier. The EBITDA was NOK 149 million, compared with NOK 634 million in the

first quarter of 2019. Excluding special items, the EBITDA was NOK 314 million

with a margin of 4.8 percent compared with 8.8 percent in the same period last

year.

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

Projects fell 14 percent to NOK 5.1 billion in the quarter from NOK 6.0 billion

a year earlier. Excluding special items, EBITDA margin was 6.0 percent in the

quarter, versus 8.0 percent a year earlier.

Revenue in Services was NOK 1.4 billion, up 7 percent from NOK 1.3 billion in

the same quarter last year, mainly driven by the subsea lifecycle services

business. The EBITDA margin excluding special items was 5.6 percent in the

quarter, down from 14.4 percent a year earlier. This was driven by the lower

activity level within Production Asset Services, in particular in Brazil and the

North Sea by the end of the quarter, and one-off adjustments of about NOK 60

million related to the COVID-19 situation and some contract-related adjustments

in Brazil - not included in special items.

The company's liquidity position at the end of the first quarter was NOK 5.8

billion. This is made up of a NOK 3 billion revolving credit facility and NOK

2.8 billion in cash.

In response to new market conditions, Aker Solutions is implementing a series of

measures to reduce cost. The measures include temporary and permanent lay-offs,

removing contractors, site closures and freezing pay levels. The cost-cutting

initiatives aim to reduce the fixed cost level by about NOK 1 billion on an

annualized basis, up from NOK 750 million announced in early April. The company

is also cutting capex investments by 40 percent from the 2019 level, to NOK 500

million in 2020.

Outlook

The unprecedented impact of the COVID-19 pandemic combined with low oil prices

has led to a significant slowdown in activity. Oil companies have reduced their

investment plans by at least 20 percent for 2020, and several projects have been

postponed. In this environment, the company's main financial priority is on cash

conservation, protecting the balance sheet and financial performance.

"The depth and scale of the decline is still unclear, but the second quarter is

likely to be one of the most uncertain and disruptive quarters our industry has

been through," said Araujo.

Given the significant market uncertainty, the company finds it challenging to

provide detailed guidance. The company expects full-year revenues to decline

about 30 percent versus the full year 2019 level.

ENDS

Media Contact:

Ivar Simensen, mob: +47 464 02 317, email: ivar.simensen@akersolutions.com

Investor Contact:

Fredrik Berge, mob: +47 450 32 090, email: fredrik.berge@akersolutions.com

Aker Solutions helps the world meet its energy needs. We engineer the products,

systems and services required to unlock energy. Our goal is to maximize recovery

and efficiency of oil and gas assets, while using our expertise to develop the

sustainable solutions of the future. Aker Solutions employs approximately 16,000

people in more than 20 countries.

Visit akersolutions.com and connect with us on

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This press release may include forward-looking information or statements and is

subject to our disclaimer, see https://akersolutions.com

This information is subject of the disclosure requirements pursuant to section 5

-12 of the Norwegian Securities Trading Act.