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Aker Solutions — Earnings Release 2020
Feb 15, 2021
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Earnings Release
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Aker Solutions ASA: Fourth-Quarter Results 2020
Aker Solutions ASA: Fourth-Quarter Results 2020
February 15, 2021 - Sound orderbook, strong market outlook, growth in energy
transition. Aker Solutions and Kvaerner successfully completed the merger in the
fourth quarter 2020. Fourth-quarter revenue ended at NOK 6.8 billion and the
EBITDA at NOK 121 million, in line with previous communication. Despite the
challenging backdrop of the COVID-19 pandemic, the order backlog grew 15 percent
compared to in 2019 and ended at NOK 38 billion. The outlook for project
sanctioning has improved for 2021 and 2022.
4Q 2020 Financial Highlights
· Revenues NOK 6.8 billion ex. special items
· EBITDA NOK 121 million ex. special items
· EBITDA margin 1.8% ex. special items
· Order intake NOK 6.8 billion
· Order backlog end 2020 NOK 38.0 billion
2020 Full Year Financial Highlights
· Revenues NOK 28.5 billion ex. special items
· EBITDA NOK 1.2 billion ex. special items
· EBITDA margin 4.3 % ex. special items
· Order intake NOK 34.2 billion
· Order backlog end 2020 NOK 38.0 billion
2020 was a challenging year operationally, due to the COVID-19 pandemic and
market volatility. The company's decisive actions during 2020 focused on the
health and safety of employees, delivering for clients, reducing costs and
protecting the balance sheet.
During the year, Aker Solutions also made significant structural and strategic
changes to transform the company and enhance shareholder value. This included
spinning off Aker Carbon Capture and Aker Offshore Wind to shareholders,
unlocking significant value, and merging Aker Solutions and Kvaerner to create a
leading execution partner for both existing and emerging energy industries. The
merger was successfully completed during the fourth quarter.
Over the last years, the previous Aker Solutions and Kvaerner organizations have
established strong offerings adapted to the transformation in the energy
markets, and the merger was another leap forward for this strategic
development.
"We have created a stronger and more optimized supplier company with a focused
strategy, and with expertise and capabilities well fit for the opportunities we
see ahead. Aker Solutions is the execution partner that will enable customers
and society to accelerate the transition to sustainable energy production. We
see significant opportunities from the increasing pace of energy transition and
will continue to optimize our operating model to unlock further growth," said
Kjetel Digre, chief executive officer of Aker Solutions.
The merger has strengthened the size and resilience of the company with a
simplified and leaner organization structure. The targeted 30 percent overhead
cost savings were fully implemented during the fourth quarter, further improving
competitiveness.
Dividend Policy
The board of directors has decided on a dividend policy based on an annual
evaluation of a dividend distribution. The board deems it prudent to build
financial robustness to support Aker Solutions' objectives for strategic
development and delivering shareholder value. The focus will be on continued
safe operations and cost improvements, predictable project execution, strong
capital discipline, healthy margins and increased cash generation. With the
continued uncertainty related to the pandemic and prioritizing financial
robustness, the board has proposed no dividend payment for 2020.
Order Intake
The order intake in 2020 grew 31 percent compared to 2019 despite market
volatility and the challenging COVID-19 pandemic. The share of renewable energy
and low-carbon projects also increased compared to the previous year. Orders in
the quarter were NOK 6.8 billion, bringing the backlog to a healthy NOK 38.0
billion. 25 percent of the awards were related to projects for energy
transition, including landmark contracts for carbon capture and storage
facilities.
Operations
Aker Solutions made good progress on several ongoing projects in the quarter.
For Equinor's Hywind Tampen project, the company started fabrication at its yard
in Stord, Norway. The Mærsk Inspirer jack-up rig was towed offshore for
installation and commissioning following modifications work at the Egersund
yard. In China, Aker Solutions delivered all manifolds and subsea trees for
CNOOC's Lingshui development. These are currently being installed in the South
China Sea. The company also completed the main deliveries of the subsea
production systems for Equinor's Troll phase 3 and Wintershall DEA's Dvalin
developments.
Outlook
Outlook for project sanctioning has increased both in traditional oil and gas,
as well as related to energy transition. The Norwegian government's temporary
tax relief package is expected to trigger sanctioning of more than 30 new
projects. Some of these have already been sanctioned, and several ongoing
studies are expected to lead to front-end engineering and design (FEED) work in
the second half of 2021.
Oil and gas is essential to meet energy demand and is expected to be a
significant share of the energy mix for decades. However, it needs to be
produced more efficiently and sustainably. In a 30-year perspective, it is
expected that renewable energy will account for 50 percent of all electricity
production. Offshore wind power will be one of the important contributors to
this transition.
"Many of our oil and gas customers now plan projects with solutions that will
enable low carbon emissions from the production. Our expertise on delivering
projects for electrification, carbon capture or subsea processing gives us a
competitive position for this market trend. Industrialized concepts, effective
project execution and close collaboration between suppliers and customers will
be key to ensure that upcoming developments are sustainable also financially,"
said Digre.
Looking ahead, while some near-term uncertainty remains related to the COVID-19
pandemic, Aker Solutions sees increased market activity. The outlook for project
sanctioning has improved and the company is currently engaged in tenders for
about NOK 76 billion. One third of this relates to energy transition within
areas such as offshore wind, electrification, carbon capture, subsea gas
compression and hydrogen.
At this early stage, based on the current backlog and ongoing FEED and tendering
activity, Aker Solutions sees its overall 2021 revenue somewhat lower than last
year's level. The underlying EBITDA margin for the year overall at this early
stage is seen at around the 5.5% to 6.0% level. This will result in an EBIT
level slightly above break-even and a negative EBT. This is not at a
satisfactory level and the main priority for the company going forward is to
improve margins and cash generation to build financial robustness and improve
value creation.
ENDS
Media Contact:
Torbjørn Andersen, mob: +47 928 85 542, email:
Investor Contact:
Fredrik Berge, mob: +47 450 32 090, email: [email protected]
Aker Solutions delivers integrated solutions, products and services to the
global energy industry. We enable low-carbon oil and gas production and develop
renewable solutions to meet future energy needs. By combining innovative digital
solutions and predictable project execution we accelerate the transition to
sustainable energy production. Aker Solutions employs approximately 14,000
people in more than 20 countries.
Visit akersolutions.com and connect with us on
Facebook (https://www.facebook.com/AkerSolutions/),
Instagram (https://instagram.com/akersolutions/),
LinkedIn (https://www.linkedin.com/company/aker-solutions),
Twitter (https://twitter.com/akersolutions) and
YouTube (https://www.youtube.com/akersolutions).
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.