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2Q 2019 Financial Highlights
Improved operations, cost reductions and generally higher activity helped support margins.
"While the market remains very competitive, we are delivering our fifth consecutive quarter with revenue growth and we are still seeing high tendering activity in our target markets," said Luis Araujo, chief executive officer of Aker Solutions.
Orders totaled NOK 3.8 billion in the quarter, bringing the backlog to NOK 29.5 billion. This was down from NOK 33.3 billion at the end of the previous quarter, reflecting the timing of new awards. The company is continuing to grow internationally and has won key orders in targeted growth regions.
Orders in the quarter included several umbilical contracts for key customers totaling around NOK 1 billion. Aker Solutions was awarded an umbrella contract for engineering services for feasibility studies, conceptual, FEED and detailed design for Petronas. The company also won a new frame agreement for subsea trees for a customer based in Norway.
Aker Solutions won 46 front-end orders in the period, bringing the total for the first half of the year to 74, compared with 73 in the same period last year. Nearly a third of those orders were from outside the Norwegian continental shelf.
"We continue to see demand for studies and front-end work for larger and more complex projects," said Araujo. "This puts us in a strong position to secure more work in future phases."
In the first half of the year, 17 concept studies led to front-end engineering and design (FEED) work and two of the FEEDs led to fully-fledged project work.
Finances were strong, with a liquidity buffer of NOK 7.2 billion at the end of the quarter.
Revenue and EBITDA
Revenue rose to NOK 7.5 billion in the quarter from NOK 6.3 billion a year earlier, driven by generally higher market activity and continued good progress on a number of key projects. Earnings before interest, taxes, depreciation and amortization (EBITDA) were NOK 623 million, compared with NOK 439 million a year earlier.
The EBITDA margin was 8.3 percent versus 7 percent a year earlier. Excluding special items, the margin was 8.4 percent compared with 7.1 percent a year earlier. EBITDA for 2Q 2019 includes NOK 146 million of lease effects from the new IFRS 16 accounting standard, while comparative figures have not been re-stated. The 2Q EBITDA margin, excluding IFRS 16 and special items, was 6.4 percent.
Aker Solutions has two reporting segments: Projects and Services. Revenue in Projects rose to NOK 6 billion in the quarter from NOK 4.9 billion a year earlier. Excluding special items, EBITDA margin was 7.9 percent in the quarter (including IFRS 16 effects) versus 6.7 percent a year earlier.
Revenue in Services rose to NOK 1.5 billion in the quarter from NOK 1.3 billion a year earlier, driven by higher activity and strong operational performance. Excluding special items, the EBITDA margin was 14 percent in the quarter (including IFRS 16 effects) compared with 13 percent a year earlier.
The market outlook for oil services remains competitive and there is still pressure on pricing. Tendering activity is high in the company’s main markets. Aker Solutions is bidding for contracts totaling about NOK 55 billion. About two-thirds of these are in the subsea area, where the company expects some key projects to be awarded over the next six to 12 months, including in Brazil, Africa and Asia Pacific.
Aker Solutions sees overall revenue up by around 10 percent in 2019 from 2018, in particular driven by the high activity levels in the Field Design sub-segment in the first half and continued high tendering activity. The company maintains its outlook for full-year underlying EBITDA margins to be up year-on-year including the effects of IFRS 16. Excluding the effects of IFRS 16, the company expects full-year EBITDA margin around current levels.
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.
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.