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Aker Solutions ASA: Second-quarter results 2013

"Aker Solutions in the second quarter resolved execution problems that led to weak results at the start of the year," said Executive Chairman Øyvind Eriksen. "We delivered on key projects, including the Ekofisk Zulu platform and seven umbilical systems, and reduced the risks in our portfolio."

Financial Highlights

  • Aker Solutions generated revenue of NOK 11.9 billion in the second quarter of 2013, compared with NOK 11.9 billion in the second quarter of 2012.
  • Earnings before interest, tax, depreciation and amortisation (EBITDA) amounted to NOK 946 million in the quarter, compared with NOK 1.36 billion in the year-earlier period.
  • The EBITDA margin was 7.9 percent in the quarter, compared with 11.4 percent a year earlier.
  • Earnings per share (EPS) were NOK 0.44 in the quarter, down from NOK 2.50 a year earlier.
  • The order intake was NOK 10.9 billion in the quarter, compared with NOK 12 billion a year earlier. The prior-year figure excludes a Category B rig contract of NOK 11 billion that was cancelled in June.
  • The order backlog was NOK 59.8 billion at the end of the quarter. The year-earlier backlog, excluding the Category B contract, was NOK 43.1 billion.

Key Developments
Aker Solutions' earnings for the second quarter of 2013 were impacted by low capacity utilisation in the engineering business as new orders waned. The result was also pushed down by idle-time at the Aker Wayfarer and the Skandi Aker vessels as well as a minor loss in the umbilicals business. The June cancellation of the Category B rig contract led to a one-time cost of NOK 375 million, of which NOK 361 million was recognised as an investment impairment and the rest booked as an operating cost.

"Aker Solutions in the second quarter resolved execution problems that led to weak results at the start of the year," said Executive Chairman Øyvind Eriksen. "We delivered on key projects, including the Ekofisk Zulu platform and seven umbilical systems, and reduced the risks in our portfolio."

The Ekofisk Zulu platform was handed over as planned to ConocoPhillips this summer and Aker Solutions also delivered the steel frame for the world's first subsea gas compression facility at the Statoil-operated Åsgard field. The Aker Wayfarer started operations in June and Skandi Aker sailed to Angola where it is expected to start work next month. Operations were improved at Aker Solutions' umbilicals plant in Norway, ensuring delivery of seven umbilical systems.

Performance in the three largest business areas - subsea, drilling technologies and maintenance, modifications and operations - was stable in the second quarter. Subsea, the largest area, increased its EBITDA to NOK 361 million from NOK 268 million a year earlier. It won NOK 3.8 billion in orders, including a USD 440 million contract on a subsea production system for a UK North Sea oilfield development, leading to a record order intake in the first half of the year.

Outlook
Aker Solutions experiences robust demand for its products and services in most markets and is well-positioned in the fast-growing deepwater segment. Tendering activity is high. At the same time, oil companies have delayed some projects amid cashflow concerns, increasing uncertainty about future investments and the timing of contract awards to oil-services providers.

Capacity utilisation at the company's new engineering hubs in the UK and US was low in the second quarter after the loss of several large contract bids in late 2012 and early 2013. Aker Solutions laid off some non-permanent staff, mainly in London and Houston, but not in Norway where the activity level remains robust.

"We see several big opportunities ahead for engineering," Eriksen said. "The current high level of activity in conceptual work indicates a new wave of engineering projects in the years to come."

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