Aker Solutions books smaller profit and revenues amid slowdown in demand
- Business & Finance
Norwegian oilfield services provider Aker Solutions on Friday posted a lower profit as well as income due to global slowdown in demand and order intake decline.
The company’s net income for the period decreased to NOK 120 million ($14.5M) in the third quarter this year from NOK 205 million ($24.8M) in the corresponding quarter last year.
Aker Solutions’ revenue also decreased to NOK 6 billion in the third quarter of 2016 from NOK 7.5 billion a year earlier amid a global slowdown in demand for oil services and decline in order intake.
The company has two reporting segments: Subsea and Field Design. Subsea revenue fell to NOK 3.5 billion in the quarter from NOK 4.5 billion a year earlier. Revenue in Field Design, which consists of MMO and Engineering, decreased to NOK 2.5 billion in the quarter from NOK 3 billion a year earlier. The decline was driven by MMO, where some major projects neared completion and volumes were small from start-up projects.
The order intake was NOK 3.5 billion in the quarter, down from NOK 4 billion a year earlier. The order backlog was NOK 32 billion at the end of the quarter, about 60 percent of which was for projects outside Norway.
The company targets an improvement in cost-efficiency of at least 30 percent across the business. Based on 2015 costs and work volumes this equals potential annual savings of at least NOK 9 billion by the end of 2017.
Going forward, the company noted it will continue to be ‘vigilant’ about its workforce capacity to ensure it fits market conditions. As part of this, Aker Solutions said it expects there will be a need for further restructuring and related one-off costs in the fourth quarter of 2016.
Looking ahead, the Norwegian company said that, although outlook for oil services remains challenging and projects are being postponed across the industry, there are some signs of a recovery, primarily in the brownfield segment, amid expectations that oil prices will stabilize at a higher level in 2017.
Offshore Energy Today Staff