Aker Solutions: Clients Applying Pressure on Bidding

Aker Solutions’ subsea business is currently in play for over NOK 30 billion in potential awards, while the whole group is engaged with tenders worth over NOK 50 billion and looking at twice this value in terms of opportunities, the company said in today’s Q2 presentation.

However, Luis Araujo, Chief Executive Officer of Aker Solutions, has pointed out tougher commercial discussions and increasing pressure on prices and that it would appear that “some costumers are holding back projects in anticipation of further downward pressure.”

Aker Solution has seen its, subsea revenue increased in the second quarter to NOK 4.8 billion from NOK 4.7 billion a year earlier. The EBIT margin narrowed to 7.1 percent from 9.1 percent a year earlier amid high tender costs and declining demand for subsea services in Norway.

“With these market headwinds unlikely to decrease, and in some cases likely to increase our outlook for subsea this year remains a flat progression on revenue and clearly no improvements in margins when compared to 2014,” said CFO, Svein Stoknes.

To remind, Aker has already adjusted the workforce in MMO and subsea services business in Norway as it expects lower activity offshore in the next two years, apart from Johan Sverdrup project, and it hasn’t excluded further adjustments in the future.

Furthermore, when asked about Aker’s position on the market regarding the recently formed alliances between Subsea 7 and OneSubsea and Technip – FMC joint venture, Araujo said that, in the end, it’s up to clients to decide what’s best for them, but also pointing out Aker’s front-end as one of the advantages compared to its competition. He also said that there are some benefits of being independent and flexible when it comes to tendering but ultimately if there’s a need for integrated approach they can offer that as well.