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Aker Solutions results for 2Q15

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Oilfield Technology,

Aker Solutions – provider of products, systems and services to the oil and gas industry – has released an update including its financial results for 2Q15. The company’s sales are steady, at NOK8 billion in 2Q15 compared to NOK8.1 billion in 2Q14. Earnings before interest, taxes, depreciation and amortisation are at NOK547 million, compared to NOK608 million a year earlier. The consistent revenue is, in part, due to progress that is being made on major projects in Africa, Norway and Brazil.

Strong order backlog

The company has secured NOK3.4 billion in orders in the quarter, including a key contract with ExxonMobil for engineering, procurement, construction and maintenance services at the Hebron oilfield, offshore Canada. The order backlog was NOK44 billion at the end of the quarter, about two-thirds of which was for projects to be delivered outside Norway.

Luis Araujo, Chief Executive Officer of Aker Solutions, commented: "Our strong order backlog and growing international presence stand us well as markets continue to be challenging with many clients exercising strict capital control."

The company has also signed an agreement with Baker Hughes, to cooperate on early-phase studies to help customers improve the economics and value of oil and gas field developments. Initial customer studies are under way.

Comparing reporting segments

A decline in demand for subsea services in the North Sea has affected Aker Solutions’ results a little, with the earnings before interest and taxes margin narrowed to 4.7% from 5.9% in 2014. However, this is not the case for the entirety of Aker Solutions’ subsea reporting segment.

Aker Solutions has two reporting segments, subsea, and field design. Subsea revenue increased in the second quarter from NOK4.7 billion in 2014, to NOK4.8 billion this year. This has been assisted by major projects in Angola, Congo and Brazil. The earnings before interest and taxes margin declined to 7.1% from 9.1% a year earlier due to high tendering costs and declining demand for subsea services in Norway.

Sales in field design – covering engineering and MMO – also declined, from NOK3.4 billion to NOK3.3 billion in the quarter when compared to 2014. However, Aker’s earnings before interest and taxes margin widened to 4.9% from 3.8% that was boosted by strong execution in engineering and lower capacity costs in MMO.

The company expects to grow in key markets in the medium term and aims to, at least, maintain its market share in all business areas.

Adapted from press release by David Bizley

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