Solstad concludes 2021 with positive numbers despite Covid hits

Solstad Offshore has reported a revenue of NOK 5.4 billion for the financial year 2021, an 8% increase compared to NOK 5 billion in 2020. Looking ahead, the Norwegian company revealed it fears that the current situation in Ukraine could impact its operations.

The Norwegian company announced a full-year adjusted EBITDA increase of 20% to NOK 1.5 billion versus almost NOK 1.3 billion in 2020, said to mainly being driven by more vessels in operation, higher day rates and better fleet utilization.

In Q4 2021, revenues increased by 11% to NOK 1.3 billion, compared to NOK 1.2 billion in 4Q 2020, while adjusted EBITDA increased by 43% to NOK 291 million versus NOK 204 million in 2020.

According to Solstad, Covid-19 remained a challenge and infection rates increased towards the end of Q4 as a result of the Omikron mutation. A survey identified “covid fatigue”, and the company thus implemented measures to mitigate the potential impact.

In addition, the Norwegian vessel owner fears that the situation underway in Ukraine could impact its operations, but that the severity is too early to state at this point in time.

“It is encouraging to see that, after years of depressed markets, there are signs of better times ahead. I am pleased to report that the 4th quarter was a step forward compared to 4Q 2020. We continued to build backlog at improving terms and we had a strong utilization of our fleet,” Solstad’s CEO Lars Peder Solstad said.

“On the negative side, Covid continued to challenge our organization, both on -and offshore. It also affected our cost, and, in a few cases, it resulted in lost revenue. Unfortunately, we see the negative impact of Covid continuing into 2022.”

Vessel utilization improvement

The overall utilization for the operational fleet in 4Q 2021 was 86%, compared to 80% in 4Q 2020.

The subsea construction support vessel (CSV) fleet had a utilization of 82% (72% in 2020), anchor handling tug supply (AHTS) fleet 85% (84%) and platform supply vessel (PSV) fleet 88% (83%).

Solstad is in the process of selling vessels that are defined as nonstrategic and not a part of the future Solstad-fleet. In general, these are the oldest and smallest vessels in the fleet. As of 31 December 2021, 25 of 37 vessels had exited the fleet, while five has been sold after quarter-end.

The company also launched a major green technology investment program of NOK 300 million and received a NOK 87 million grant from Innovation Norway for battery-hybrid and shore-power upgrades for 11 vessels over the next three years.

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Solstad says that the demand for offshore vessels maintains its positive trend and buildup of contract backlog as commercial terms improve. Particularly CSVs are in demand from both the oil & gas and offshore wind industries while the activity level for the AHTS and PSV segments see signs of improvement.

The company’s backlog is approximately NOK 5.6 billion whereof NOK 3.5 billion is for execution in the next 12 months.

“Eventually, a new generation of vessels will arrive, but this will still take several years. In the meantime, we must focus on how we can improve the existing vessels to meet our target of 50% reduction of GHG emissions within 2030,” Lars Peder Solstad said.

“The plan is to continue to invest in battery-hybrid systems, shore power connections and other measures that can reduce emissions further. Digital solutions, remote services and operations are other strong focus areas as we upgrade existing vessels.”

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