Aker Solutions Reports Earnings Prior to Split

Aker Solutions reports its second-quarter 2014 earnings ahead of its plan to split into two companies at the end of September 2014.

One company will keep the current name and be comprised of the Subsea, Umbilicals, Engineering, and Maintenance, Modifications and Operations (MMO) areas.

Aker adds that pro-forma second-quarter revenue for the new Aker Solutions rose to NOK 8.1 billion from NOK 7.5 billion a year earlier, helped by a 13 percent increase in sales of subsea equipment and services. The new company's pro forma earnings before interest, taxes, depreciation and amortization (EBITDA) increased to NOK 592 million in the quarter from NOK 481 million a year earlier.

The other company,  will be called Akastor and include Drilling Technologies, Aker Oilfield Services, Process Systems, Surface Products and Business Solutions. Pro forma revenue for this company climbed 25 percent in the second quarter to NOK 6 billion. The company had a pro forma EBITDA loss of NOK 129 million in the quarter versus a profit of NOK 303 million a year earlier. The earnings were impacted by one-off items totaling NOK 451 million, including a previously announced provision on the Aker Wayfarer, a vessel in the Aker Oilfield Services unit.

"We've taken huge strides since announcing the split in April - putting in place new management teams and structures for the two companies," said Øyvind Eriksen, Aker Solutions' chairman. "Today we are also announcing the first pro forma earnings figures for these companies."

New management structures were put in place this month as Luis Araujo, formerly regional president for Aker Solutions in Brazil, on July 1 became chief executive officer of the new Aker Solutions. Frank Ove Reite, formerly managing partner at Converto, became CEO of Akastor. Øyvind Eriksen has been nominated as chairman of the board of both the new Aker Solutions and Akastor.

Current Aker Solutions Revenue
Revenue  rose 17 percent to NOK 13 billion in the second quarter from NOK 11 billion a year earlier. EBITDA fell to NOK 429 million, compared with NOK 786 million a year earlier. The EBITDA margin narrowed to 3.3 percent from 7.1 percent a year earlier. 

Earnings were impacted by impairments and a provision totaling NOK 1.6 billion on assets and goodwill of the Aker Oilfield Services business, which will be part of Akastor after the split. Excluding one-off items, the margin was 7.5 percent in the second quarter of 2014.