Kongsberg Maritime Revenues Slip on Offshore Division Slowdown

Kongsberg Maritime (KM) has reported operating revenues for the second quarter 2016 of NOK 2.36 billion ($287 million) against NOK 2.5 billion ($305 million) same time last year.

The EBITDA margin was 10 per cent, and was adversely influenced by NOK 5 million related to restructuring costs in offshore activities.

Year-to-date operating revenues came to NOK 4.84 billion, down 5.5 per cent compared with end-June last year. The EBITDA margin  was 10.3 per cent, and was adversely influenced by MNOK 30 in restructuring costs. Adjusted accordingly, the EBITDA margin was 10.9 per cent.

“Business is good at Merchant Marine and in the non-offshore-related segments of Subsea, while the pace is slower in KM’s offshore-related activities,” the company said in its second quarter and first half 2016 earnings report.

In recent quarters, there has been a significant change in the project mixes for Offshore and Subsea alike. This has a negative impact on KM’s overall profitability. Subsea has seen a substantial reduction in oil- and gas-related activities, but an increase in other markets, especially in autonomous underwater vehicles and fisheries. At Offshore, there has been a reduction in deliveries with traditionally higher profitability.

Kongsberg Maritime said its new orders came to NOK 2,03 billion in Q2, down from NOK 2.53 billion in the prior-year quarter. Merchant Marine’s influx of new orders was up roughly 30 per cent from Q2 2015. Subsea and Emerging Business also saw a good influx of new orders, on a par with Q2 2015. In Offshore, new orders in Q2 were substantially lower than in Q2 2015. Thus far in 2016, new orders in the Offshore Division are down 20 per cent year-on-year.

The Offshore Division’s order backlog totalled some NOK 3.9 billion at end-quarter, of which roughly half is for drilling vessels and conventional offshore vessels.

“Kongsberg Maritime continues its diversification strategy and we see that it is having an impact. The level of activity and new orders in the merchant marine segment and the non-offshore-related parts of Subsea are good. As regards offshore, oil and gas we will continue to follow the market closely, and further cost level adjustments are considered on an ongoing basis in light of the market situation”, says Geir Håøy, CEO of Kongsberg.

Outlook

  • Significant drop in contracting in the offshore vessel market, will impact revenues and margins;
  • Non recurring restructuring costs in 2016 currently estimated to MNOK 120-150, further cost level adjustments considered on an ongoing basis;
  • Revenues and margin level in H2 expected to be lower than H2 2015 and H1 2016.

Kongsberg Group

In Q2 2016, the Group earned operating revenues of NOK 4.12 billion, down 2.3 per cent from Q2 2015. The reduction was largely due to the oil- and offshore-related segments of the Group.

The Group generated profit after tax of NOK 306 million, compared to NOK 193 million in the corresponding period in 2015.

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