Aker Solutions’ revenue fell, and net loss deepened in the fourth quarter of 2016, amid the global market slowdown in demand for oil services. The company expects more of the challenging market conditions ahead and will pay no dividend for 2016.
The Norwegian offshore oilfield services provider said its revenue fell to NOK 6.1 billion ($732.7 million) compared to NOK 7.8 billion ($937 million) in the fourth quarter 2015.
Net loss deepened to NOK 268 million ($32.2 million) in the quarter versus a loss of NOK 250 million ($30 million) a year earlier.
The earnings were negatively impacted by special items of NOK 574 million, compared with a negative impact of NOK 636 million a year earlier. These included NOK 130 million in costs of reducing capacity and restructuring amid a company-wide reorganization aimed at further strengthening operations.
The order backlog was NOK 31.2 billion at the end of the quarter, about 60 percent of which was for projects outside Norway.
According to the company, the outlook for oil services remains challenging.
“There are some signs of a recovery, primarily in the brownfield segment, and oil prices are seen stabilizing at a higher level in 2017. Increased demand for front-end engineering services is also an early indication of a pickup in activity ahead. Industry cost cuts are having an effect, with break-even costs coming down on developments. This is expected to spur new industry investments and project sanctions this year,” Aker solution said.
The company expects sees overall revenue to drop of about 10-15 percent in 2017 from the prior year as an anticipated modest pickup in activity for maintenance and modifications services is offset by weaker subsea volumes.
For the long-term, Aker sees the outlook as positive.
“Declining reserves and lower oil and gas production in many parts of the world are expected to generate a need for investments in developments and increased recovery from existing fields,” it said.
As for the dividend for 2016, there will not be any.
The company said: “The board of directors proposes that no dividend payment be made for 2016. While Aker Solutions had a solid financial position at the end of 2016, the board deems it prudent to exercise caution amid continued uncertainty about the outlook for the oil and gas industry. The company maintains its policy of paying a dividend of between 30 and 50 percent of net profit over time either through cash or share buybacks.”
Offshore Energy Today Staff