Norwegian oil services company Aker Solutions saw a decrease in profit as well as revenues for the first quarter of this year due to market slowdown. However, looking ahead, the company sees some signs of recovery.
According to its quarterly report on Tuesday, the company won NOK 4.6 billion in new orders in the quarter. The order backlog was NOK 30.7 billion at the end of the quarter, of which more than half was for projects outside Norway.
Aker Solutions’ net income for the first quarter 2017 fell to NOK 62 million from NOK 169 million.
Revenue decreased 20% to NOK 5.2 billion in the quarter from NOK 6.5 billion a year earlier amid the global market slowdown and as some projects neared completion.
Specifically, revenues declined in the company’s Projects segment to NOK 4.1 billion in the quarter from NOK 5.1 billion a year earlier and revenues in Services segment fell to NOK 1.1 billion in the quarter from NOK 1.5 billion a year earlier. The first segment was impacted by a generally lower market activity and on some projects nearing completion and the second one by decreased activity for subsea services and a maturing production asset services portfolio.
‘Signs of recovery’
According to the company’s report, the outlook for oil services remains challenging as projects continue to be postponed amid a volatile oil-price environment. There are some signs of a recovery, particularly in the brownfield segment where oil companies are focusing on optimizing output from existing fields. Industry cost cuts are bringing down break-even costs on developments, which is expected to spur new investments and project sanctions this year, said Aker Solutions.
The company further stated that increased demand for front-end engineering services is also an early indication of a pickup in activity ahead. Tendering activity is healthy and Aker Solutions is currently bidding for contracts totaling about NOK 50 billion. The majority of these are in the subsea area, where the company anticipates several greenfield projects to be awarded in the next 12 months.
Luis Araujo, chief executive officer of Aker Solutions, said: “While we continue to face market uncertainty, the signs of improving brownfield activity and expectations of key subsea projects moving forward bode well for 2018 activity levels.”
The company continues to see overall revenue down by about 10-15 percent in 2017 from the prior year, with an anticipated modest pickup in activity in the field design segments of both Projects and Services that will be offset by weaker subsea volumes.
Offshore Energy Today Staff