Impairments drag Subsea 7 into the red

Subsea engineering and construction company Subsea 7 booked a loss in the last quarter of 2019 largely due to a $100 million impairment charge as its revenues dropped compared to the prior-year period.

The company on Wednesday posted the fourth quarter 2019 revenue of $889 million compared to revenues of $1.023 billion in the same period of 2018.

According to the company, fourth-quarter revenue was 13% lower than the prior-year period reflecting lower activity levels in Africa and Renewables and Heavy Lifting.

Subsea 7’s net loss in the fourth quarter of 2019 totaled $129 million, compared to a profit of $32 million in 4Q 2018.

A goodwill impairment charge of $100 million was recognized in the Renewables and Heavy Lifting business, reflecting near-term weakness in the wind turbine foundations market.

Net loss, excluding the goodwill impairment charge, was $29 million. Excluding the goodwill impairment charge, adjusted diluted earnings per share was a loss of $0.12 compared to earnings per share of $0.12 in the same period last year. The reduction from the prior year was driven by impairment charges totaling $70 million mainly relating to two older vessels that are candidates for disposal.

The company’s order intake totaled $3.9 billion in the year. Order backlog increased to $5.2 billion at the year-end, with $3.3 billion expected to be executed in 2020.

Subsea 7 said that the continued improvement in the deepwater oil and gas markets this year had supported increased tendering activity and a gradual improvement in pricing compared to 2018.

While demand for offshore wind turbine services is growing in support of the transition to low carbon energy production, continued competition in the foundations market continues to negatively impact pricing, but this is expected to improve in the longer-term as the market rebalances, the company said.

Guidance for full-year 2020 is unchanged with both revenue and Adjusted EBITDA expected to be higher than in 2019, driven by an increase in activity in key markets.

Offshore Energy Today Staff

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