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3Q 2019 Financial Highlights
The company delivered strong execution on major projects globally. Highlights included work to get the Johan Sverdrup field ready to start production on October 5, below budget and two months ahead of schedule. The company has been involved in this project since its early phase from front end, through design, construction and hook-up. Other highlights included first oil on the Mariner project in the UK for Equinor, and completed delivery for the Ærfugl and Skogul projects in Norway under the subsea alliance contract with Aker BP and Subsea 7.
"We delivered another quarter of revenue growth compared to last year, reflecting good execution and high activity levels in field design and subsea on the back of work won over the last 18 months," said Luis Araujo, chief executive officer of Aker Solutions. "The market is still competitive, but we continue to see high tendering activity in our main markets. Despite the fact that projects take longer to be awarded, we expect several prospects to be concluded over the next six months," he added.
Orders totaled NOK 4.7 billion in the quarter, bringing the backlog to NOK 27.4 billion. The order intake was primarily driven by smaller awards and growth in existing contracts. Aker Solutions won 37 front-end orders in the period, bringing the total for the first three quarters of the year to 111, slightly higher than the record number from last year.
The financial position remained solid, with a liquidity buffer of NOK 6.8 billion at the end of the quarter.
Revenue and EBITDA
Third-quarter revenue rose to NOK 7.1 billion in the quarter from NOK 6.5 billion a year earlier, driven by increased activity levels in both the Projects and Services segments. Earnings before interest, taxes, depreciation and amortization (EBITDA) were NOK 553 million, compared with NOK 463 million a year earlier. The EBITDA margin was 7.8 percent. Excluding special items, the margin was 8.0 percent compared with 7.5 percent a year earlier.
Aker Solutions has two reporting segments: Projects and Services. Revenue in Projects rose to NOK 5.6 billion in the quarter from NOK 5.2 billion a year earlier, mainly driven by high activity level in the Field Design sub-segment compared to the same period last year. Excluding special items, EBITDA margin was 8.1 percent in the quarter versus 7.2 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 international growth in the company's Production Asset Services sub-segment. Excluding special items, the EBITDA margin was 11.2 percent in the quarter compared with 14.9 percent a year earlier.
The outlook for oil services remains competitive. Tendering activity is high, with a good balance between regions and segments. Aker Solutions is currently bidding for contracts totaling about NOK 55 billion. The company expects visibility on order intake to improve, as several prospects are likely to be concluded over the next six months.
Aker Solutions reported revenue growth of 12 percent in 2018 and the company expects its 2019 revenue to increase at a similar rate, with fourth quarter underlying EBITDA margin slightly below the third quarter level.
For 2020, overall revenue and EBITDA margin are currently expected slightly down year-on-year.
"After delivering nearly 25 percent revenue growth and stable margins over the past two years, we expect to see slightly lower revenues and margins next year," said Araujo. "This is mainly driven by the order intake in 2019 and the phasing in of new work won in a very competitive market. We believe we are well positioned to win new work and to deliver a solid financial and operational performance in 2020."
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.