Dividend Changes as Kvaerner Q2 Earnings Beat Street
Norwegian oil services firm Kvaerner posted forecast-beating second-quarter core profit and lifted its 2015 revenue outlook, but also trimmed its dividend policy to reflect the weak oil market's impact on future earnings.
The Oslo-listed firm, which builds large structures like platforms, is facing fierce competition as oil firms cut costs because of the slump in oil prices.
"The industry is facing a challenging market, probably the most challenging market in 15 years," Chief Executive Jan Arve Haugan said at an investor presentation.
"Oil companies say cost level must go down to agree on new investments. In our segment we see some prospects but we expect hard competition and there will be pressure on margins," he said.
Kvaerner's earnings before interest, tax, depreciation and amortisation (EBITDA) dropped to 109 million Norwegian crowns ($13.34 million) from 289 million crowns in the year-ago period, above expectations for 77 million crowns in a Reuters poll of analysts.
The company, which has paid dividends once a year up until now, proposed a semi-annual dividend of 0.15 crown per share to be paid in October this year compared to 0.67 crown per share for the full year 2014.
A Reuters poll of analysts had expected a full year 2015 dividend of NOK 0.70 crowns per share..
"We have revised the dividend policy to prioritise the cash position and balance sheet," Haugan said.
It raised expectations for 2015 revenues to 13 or 14 billion crowns from 12 and 13 billion crowns, "due to adjustments to project phasing and contributions from new contracts."
Reporting By Stine Jacobsen and Ole Petter Skonnord