UK-based subsea company Subsea 7 recorded higher revenues for the second quarter of 2018 but its profit was halved during the period.
In its report on Thursday Subsea 7 said that its net income was $74 million in the quarter, a decrease compared to net income of $146 million in 2Q 2017.
This was primarily due to the decrease in net operating income partially offset by a net foreign currency gain of $25 million in 2Q 2018, recognized within other gains and losses, compared to a net foreign currency loss of $23 million in 2Q 2017.
Revenue for the second quarter was $1.16 billion, an increase of $137 million or 13% compared to 2Q 2017 and revenues of $1.02 billion.
The year-on-year increase was due to higher activity levels in the SURF and Conventional Business Unit primarily due to increased activity in the Middle East. This was partially offset by lower activity levels in the Renewables and Heavy Lifting, and i-Tech Services Business Units.
Subsea 7’s new awards and escalations totaled $1.3 billion in the second quarter. Order backlog at the end of June was $5.4 billion, and included $95 million of order backlog from the acquisition of Siem Offshore Contractors in the second quarter.
According to Subsea 7, awards to the market have increased over the last three quarters as clients have selectively moved ahead with projects sanctioned at the start of the recovery; most of these were tie-back solutions for incremental production.
Recent awards have been enabled by early engagement, new technology and simplified solutions and benefitted from lower pricing in an underutilized supply chain. Subsea 7 has received a good share of these awards, the company noted.
The company added that tendering activity has increased for oil and gas projects and there is better visibility on the timing of project sanctions. Although project margins on new awards remain under pressure, pricing is expected to improve in the medium-term, linked to the increase in offshore activity.