Aker Sees Robust Demand Following Q2 2013 Slip

Aker Solutions ASA second-quarter results 2013 show earnings, order intake down slightly, but little cause for concern on the horizon

Financial highlights

• Aker Solutions generated revenue of NOK 11.9 billion in the second quarter of 2013, compared with NOK 11.9 billion in the second quarter of 2012.
• Earnings before interest, tax, depreciation and amortisation (EBITDA) amounted to NOK 946 million in the quarter, compared with NOK 1.36 billion in the year-earlier period.
• The EBITDA margin was 7.9 percent in the quarter, compared with 11.4 percent a year earlier.
• Earnings per share (EPS) were NOK 0.44 in the quarter, down from NOK 2.50 a year earlier.
• The order intake was NOK 10.9 billion in the quarter, compared with NOK 12 billion a year earlier. The prior-year figure excludes a Category B rig contract of NOK 11 billion that was cancelled in June.
• The order backlog was NOK 59.8 billion at the end of the quarter. The year-earlier backlog, excluding the Category B contract, was NOK 43.1 billion.

Aker Solutions' earnings for the second quarter of 2013 were impacted by low capacity utilisation in the engineering business as new orders waned. The result was also pushed down by idle-time at the Aker Wayfarer and the Skandi Aker vessels as well as a minor loss in the umbilicals business. The June cancellation of the Category B rig contract led to a one-time cost of NOK 375 million, of which NOK 361 million was recognised as an investment impairment and the rest booked as an operating cost.

"Aker Solutions in the second quarter resolved execution problems that led to weak results at the start of the year," said Executive Chairman Øyvind Eriksen. "We delivered on key projects, including the Ekofisk Zulu platform and seven umbilical systems, and reduced the risks in our portfolio."

Outlook

Aker Solutions experiences robust demand for its products and services in most markets and is well-positioned in the fast-growing deepwater segment. Tendering activity is high. At the same time, oil companies have delayed some projects amid cashflow concerns, increasing uncertainty about future investments and the timing of contract awards to oil-services providers.