Akastor slashing more jobs to keep costs at bay

Akastor, a Norway-based oil-services investment company, will cut 585 jobs by the end of 2015.  

Akastor, formerly a part of Norway’s oilfield services company Aker Solutions, owns six stand-alone businesses within the oilfield service industry: MHWirth, Frontica Business Solutions, AKOFS Offshore, Fjords Processing and KOP Surface Products.

Akastor said Thursday that cost reduction activities will involve all of its portfolio companies, suffering from the weak oilfield services market, in order “to adapt its cost base to the current market environment”.

The company has so far this year reduced its workforce by 13.5 percent, down to 6585 employees. However, the company will not stop there, as it on Thursday announced more cuts. Namely, Akastor said its aim is now to have 6000 employees by the end of 2015.

Akastor Chief Executive Officer Frank Reite said:

“We are taking actions to align our companies to the current market environment, and the majority of our portfolio companies has had a decent performance in the first half of 2015.

“We are working in close cooperation with the management teams to strengthen and develop each of our businesses. We have a long-term perspective, but must at the same time assure that our portfolio companies have the required flexibility to operate in a challenging market.”

MHWirth

In its presentation of the second quarter and first half 2015 performance, Akastor noted that MHWirth, a provider of drilling solutions and services, suffered the most significant impact of the market situation during both quarters of the year so far.

Namely, contract awards and tenders are almost completely gone with 21 new floater fixtures so far this year compared to 89 in 2014. Floater utilization rates are at approximately 85%, which is the lowest level in more than 10 years.

In addition, no new orders for floaters have been signed in 1H-2015.

These market conditions have resulted in a revenue drop for MHWirth of 32% the first half of 2015 compared to first half 2014. In response, MHWirth started adapting the organization early on in 2015. Namely, the company announced a personnel reduction of 750 in the first quarter.

In the second quarter, additional cuts have increased the total personnel reduction to approximately 1000 for the full year 2015. The corresponding reduction of the annual cost base is estimated to be around NOK 700 million.

Akastor group’s financial results

The Akastor group’s revenue was NOK 3 693 million in the second quarter of 2015, down 39 percent from the same quarter one year earlier when its revenue was NOK 6 014 million.

When compared to the first half of 2014 and revenues of NOK 11 011 million, Akastor’s revenue in the first half of 2015 was down 25 percent to NOK 8 239 million.

In addition, Akastor informed today that its CEO Frank O. Reite is leaving to take the position of CFO in Aker ASA. He will be succeeded by Kristian Røkke who is currently Chairman of Aker Philadelphia Shipyard ASA.

The company’s net loss for the second quarter was 298 million NOK.

Offshore Energy Today Staff

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