Following a prolonged slump in oil prices, Kvaerner, a Norwegian provider of engineering, procurement and construction services, expects for the market decline to start leveling out despite recording a decrease in quarterly profit and revenues.
Kvaerner said on Monday that, in spite of the challenging market, its order intake in the first quarter 2017 amounted to NOK 6.6 billion ($764.1M) thus increasing the total order backlog to NOK 10.8 billion ($1.25B).
According to its quarterly financial report, the company’s revenues dropped during the first quarter of 2017 to NOK 1.55 billion from NOK 2.228 billion in the first quarter of 2016. According to the company, the decrease was mainly due to reduced activity within Process Solutions business.
During the first quarter 2017, the company’s profit decreased amounting to NOK 95 million, compared to NOK 217 million in the prior-year quarter.
Since the oil price started a decline in 2014, the market for both new investment projects and for operation of existing facilities has been turbulent. However, Kvaerner said it sees signals that the decline may now start to level out. The company has identified a growth in the number of relevant prospects which oil companies expect to be sanctioned over the next years. Some few of these prospects may end up as projects of a large size, while the majority of the prospects represent projects of a moderate size, Kvaerner said.
Kvaerner’s President & CEO, Jan Arve Haugan, said: “Our activity is now lower for a period, as an effect of a market with few contracts to bid for over the last two years. However, much of this effect is compensated by the fact that our current projects are in phases where a large degree of the value creation is delivered by Kvaerner’s own internal resources.”
For 2017, the company expects revenues to be around NOK 7 billion. Although revenue level will be lower in 2017, activity level at the yards will be higher than in 2016 due to phasing of projects and portfolio mix, Kvaerner explained.
Looking ahead, the company said that the largest market segments are still challenging but it expects some few significant prospects to come up for award during the next 12-24 months.
Offshore Energy Today Staff