Subsea 7 profit dips. CEO sees gradual recovery in tendering activity

Offshore installation and construction company Subsea 7 has reported a rise in the third quarter revenue, but a drop in profit.

The company’s revenue for the quarter ended September 30, 2017, was $1,06 billion, up from $928 million a year ago. Net income came in at $111 million, down from last year’s third quarter $149 million.

Jean Cahuzac, Chief Executive Officer, said the company’s moves to strengthen and grow the business have diversified the income by adding significant new revenues to the group in the conventional and renewables market segments.

Renewables are mainly the reason the revenue grew.

Subsea 7 said third quarter revenue of $1,063 million was 15% higher than the prior year comparative period, largely boosted by Renewables and Heavy Lifting Business Unit, mainly related to the Beatrice wind farm project. This was partially offset by lower activity levels within the SURF and Conventional and i-Tech Services Business Units, the company said.

Adjusted EBITDA of $250 million was 13% lower than the prior year and included the recognition of $13 million losses from joint ventures and associates.

Adjusted EBITDA margin was 24%, which reflected fewer projects in the final stages of completion, lower offshore activity levels and more competitive pricing on projects awarded during the downturn, partly offset by continued good execution and cost discipline.

“Our project portfolio composition is changing as we complete the remaining SURF projects that were awarded prior to the downturn. Major awards to market in the last three years have been more price-competitive and relatively few in number. As a result of the change in our mix of activity, our Adjusted EBITDA percentage margin has begun to decline from the exceptionally high levels reported since thesecond half of 2015, “ Cahuzac said.

He said that Subsea 7’s differentiated service offering, collaborative approach and early actions to reduce costs have enabled the company’s clients to sanction and award several offshore projects despite the lower oil price.

“Although the market environment remains challenging, we are seeing a gradual recovery in tendering activity and still expect the number of awards to the market to increase in the first half 2018.’