Aker Solutions’ orders more than double amid signs of market recovery

Norwegian oilfield services company Aker Solutions saw its orders more than double in the third quarter of 2018 from a year earlier amid increasing signs of a market recovery.

Aker Solutions' headquarters
Aker Solutions’ headquarters, Fornebu. Source: Aker Solutions

During the third quarter, Aker Solutions’ orders totaled NOK 5.9 billion ($712 million), bringing the backlog to NOK 36.1 billion ($4.4 billion). In the third quarter of 2017, Aker Solutions orders totaled NOK 2.6 billion.

“Our order intake in the quarter more than doubled versus the same period a year earlier and we’re seeing high tendering activity in all our markets,” said Luis Araujo, chief executive officer of Aker Solutions.

“A main development this quarter is that we are seeing increased order intake in key global markets such as China, Brazil and Angola, in line with our strategic ambitions,” he said.

The outlook for oil services remains competitive and there is pressure on pricing. Still, there are increasing signs of a recovery amid lower break-even costs and higher oil prices. Tendering activity is high in the company’s main markets and Aker Solutions is bidding for contracts totaling about NOK 45 billion. About two-thirds of these are in the subsea area, where the company expects key projects to be awarded over the next six to 12 months, including in Brazil, the UK, Africa, Australia and Asia Pacific.

When it comes to the company’s financial performance during the third quarter 2018, its net profit increased to NOK 155 million from NOK 124 million in the last year’s third quarter.

Revenue rose 21% to NOK 6.5 billion in the quarter from NOK 5.4 billion a year earlier, driven by increased North Sea modifications work and continued good progress on a number of key projects across all business lines.

Aker Solutions has two reporting segments: Projects and Services. Revenue in Projects rose to NOK 5.2 billion in the quarter from NOK 4.2 billion a year earlier, mainly driven by recent strong order intake and ongoing North Sea modification and hook-up jobs. Revenue in Services rose to NOK 1.3 billion in the quarter from NOK 1.2 billion a year earlier, driven by international growth in the company’s production asset services sub-segment.

For 2018, Aker Solutions continues to see overall revenue up by close to 10 percent from 2017, helped by the strong order intake and performance year to date. Aker Solutions sees overall revenue in 2019 slightly up from 2018, on the back of our strong order intake year-to-date, and continued high tendering activity with underlying 2019 EBITDA margin expected to remain around full-year 2018 levels.

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