Subsea 7 Books $418 Million Profit in 2016

Oslo-listed Subsea 7 has substantially narrowed its loss, compared to the prior-year quarter, and bounced back in black on an annual basis, after implementation of cost reduction measures in order to adjust to current offshore oil & gas market. 

To remind, Subsea 7 has since the start of 2014 reduced its workforce by over 40 percent. The company expects to complete the resizing measures by early 2017, and have a workforce of approximately 8,000 people and a fleet of 33 vessels.

The subsea engineering and construction specialist posted quarterly net loss of $13 million, on revenue of $932 million, versus net loss of $421 million, or $1.30 per diluted share on revenue of $1.02 billion same time last year. Quarterly result was impacted by a goodwill impairment charge of $90 million and a $147 million impairment charge relating to vessels and operating equipment.

The company reported adjusted EBITDA of $288 million, and margin of 31 percent (30 percent in Q4 2015). Full-year percentage margin increased to 32 percent from 25 percent in 2015.

Revenue for the twelve months 2016 decreased by close to $1.2 billion against revenues in 2015, ending at $3.56 billion. Full-year operating income decreased by $54 million, however, the company ended the year in black, with net income of $418 million, or $1.27 per diluted share, compared to net loss of $37 million for the twelve months of 2015 due to more than half a billion impairment charges Subsea 7 recognised that year.

Subsea 7’s order intake was $0.6 billion for the quarter, which includes contracts offshore Egypt, Norway and Australia.

The company said its order backlog at the end of December 2016 was $5.7 billion, some $0.4 billion lower from the prior-year comparable period.

2017 Guidance

Subsea 7 said it still expects its revenue to be broadly in line with 2016, but estimates adjusted EBITDA percentage margin to be significantly below 2016 levels.

“Looking ahead to 2017 we are well positioned to build on our strengths. We are seeking to expand our presence in renewable energy, and in January 2017 made an offer to acquire Seaway Heavy Lifting, a company in which we already hold a 50% interest.

“We remain focused on finding better, more efficient solutions to enable our clients to sanction their projects in a lower oil and gas price environment,” said Jean Cahuzac, chief executive officer of Subsea 7.

Subsea 7’s board of directors will recommend that a special dividend of NOK 5.00 per share be paid, equivalent to a total dividend of approximately USD 200 million.

Subsea World News Staff

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