Aker Solutions’ revenues strengthened in the second quarter of 2019 as the company won new contracts and made good progress executing projects globally, the company said in its release.
2Q 2019 Financial Highlights
Revenue NOK 7.5 billion
EBITDA NOK 623 million
EBITDA margin 8.3%
EBITDA ex. special items NOK 629 million
EBITDA margin ex. special items 8.4%
Earnings per share ex. special items NOK 0.56
Order intake NOK 3.8 billion
Order backlog NOK 29.5 billion
Improved operations, cost reductions and generally higher activity helped support margins.
Orders totaled NOK 3.8 billion in the quarter, bringing the backlog to NOK 29.5 billion. This was down from NOK 33.3 billion at the end of the previous quarter, reflecting the timing of new awards. The company is continuing to grow internationally and has won key orders in targeted growth regions.
Orders in the quarter included several umbilical contracts for key customers totaling around NOK 1 billion. Aker Solutions was awarded an umbrella contract for engineering services for feasibility studies, conceptual, FEED and detailed design for Petronas. The company also won a new frame agreement for subsea trees for a customer based in Norway.
Aker Solutions won 46 front-end orders in the period, bringing the total for the first half of the year to 74, compared with 73 in the same period last year. Nearly a third of those orders were from outside the Norwegian continental shelf.
In the first half of the year, 17 concept studies led to front-end engineering and design (FEED) work and two of the FEEDs led to fully-fledged project work.
Finances were strong, with a liquidity buffer of NOK 7.2 billion at the end of the quarter.
Revenue rose to NOK 7.5 billion in the quarter from NOK 6.3 billion a year earlier, driven by generally higher market activity and continued good progress on a number of key projects. Earnings before interest, taxes, depreciation and amortization (EBITDA) were NOK 623 million, compared with NOK 439 million a year earlier.
The EBITDA margin was 8.3 percent versus 7 percent a year earlier. Excluding special items, the margin was 8.4 percent compared with 7.1 percent a year earlier. EBITDA for 2Q 2019 includes NOK 146 million of lease effects from the new IFRS 16 accounting standard, while comparative figures have not been re-stated. The 2Q EBITDA margin, excluding IFRS 16 and special items, was 6.4 percent.
Aker Solutions has two reporting segments: Projects and Services. Revenue in Projects rose to NOK 6 billion in the quarter from NOK 4.9 billion a year earlier. Excluding special items, EBITDA margin was 7.9 percent in the quarter (including IFRS 16 effects) versus 6.7 percent a year earlier.
Revenue in Services rose to NOK 1.5 billion in the quarter from NOK 1.3 billion a year earlier, driven by higher activity and strong operational performance. Excluding special items, the EBITDA margin was 14 percent in the quarter (including IFRS 16 effects) compared with 13 percent a year earlier.
Outlook
The market outlook for oil services remains competitive and there is still pressure on pricing. Tendering activity is high in the company’s main markets. Aker Solutions is bidding for contracts totaling about NOK 55 billion. About two-thirds of these are in the subsea area, where the company expects some key projects to be awarded over the next six to 12 months, including in Brazil, Africa and Asia Pacific.
Aker Solutions sees overall revenue up by around 10 percent in 2019 from 2018, in particular driven by the high activity levels in the Field Design sub-segment in the first half and continued high tendering activity. The company maintains its outlook for full-year underlying EBITDA margins to be up year-on-year including the effects of IFRS 16. Excluding the effects of IFRS 16, the company expects full-year EBITDA margin around current levels.