Subsea 7 drops to loss against a backdrop of sluggish activity
Subsea 7 slipped into the red in the third quarter 2020 on decline in activity in the sector and costs generated by the Covid-19 pandemic.
The engineering and construction specialist recognised quarterly net loss of $43 million, against profit of $42 million in Q3 2019.
This brings losses since the start of the year to nearly $1 billion.
Subsea 7 also booked a major loss in Q2 2020 on restructuring and impairment charges as well as activity drop in the SURF and Conventional business units.
Diluted loss per share was 14 cents in Q3 2020 versus diluted earnings per share of 15 cents in Q3 2019.
Third quarter revenue of $947 million was pretty much in line with the prior-year period, down only $3 million.
This reflected lower revenue in the SURF and Conventional business unit, with low activity levels in West Africa and the Middle East.
SURF and Conventional revenue for the third quarter was $613 million, a decrease of $213 million or 26 per cent from Q3 2019.
Revenue in the Life of Field business unit was $65 million, a decrease of $5 million compared with Q3 2019.
However, revenue in the Renewables and Heavy Lifting business unit was $269 million, up $214 million from Q3 2019.
In addition to lower activity, the company booked $20 million costs associated with Covid-19.
Utilisation of active fleet was 84 per cent in Q3, up from 83 per cent same time last year.
Orders and Backlog
In the third quarter of 2020, Subsea 7 booked new orders totalling $0.7 billion.
Backlog at the end of September was $6.8 billion, of which $1.2 billion should be executed in 2020. The backlog for execution in 2021 is $3.2 billion.
$4.2 billion of the backlog at 30 September 2020 related to the SURF and Conventional business and $2.1 billion related to the Renewables and Heavy Lifting business unit.
At present Subsea 7 anticipates that full-year revenue will be broadly in line with the prior year.
Also, adjusted EBITDA should be in line with current market expectations.
The company specifically sees strong outlook in Renewables for near-term, with progress on the $1.4 billion Seagreen project accelerating into 2021, and high levels of tendering activity for new contracts.