Aker Solutions revenue rose 21% to NOK 9.2 billion in the fourth quarter of 2014 from a year earlier, helped by strong progress on major projects across the global business. Earnings before interest and taxes (EBIT) climbed to NOK 557 million in the quarter from NOK 486 million a year earlier.
The EBIT margin narrowed to 6.1% from 6.4% amid a slowdown in the Norwegian maintenance, modifications and operations (MMO) market and as some major subsea projects are still in a start-up phase. This was partly offset by strong project execution at the U.S. umbilicals plant, improved capacity utilisation in the engineering area and reduced overhead costs in MMO. The EBIT margin, excluding one-off items, was 6.8%.
The company secured NOK 6.2 billion in orders in the quarter, including a hook-up and commissioning contract from DSME for Statoil's UK Mariner project. This increased the backlog to a near-record NOK 48.3 billion kroner from NOK 41.2 billion. About two-thirds of the backlog stemmed from projects to be delivered outside Norway.
"Our robust order backlog puts us in a strong position as we face market uncertainty caused by the recent oil price drop," said Luis Araujo, Aker Solutions' chief executive officer. "We made good progress in the quarter on major subsea and engineering projects and also benefited from improvement programs across the business."
The company's board proposes paying 1.45 kroner a share in a cash dividend to shareholders, equal to 30% of net income.
After the split in September, Aker Solutions now has two reporting segments: Subsea, consisting of the subsea and umbilicals businesses, and Field Design, comprising the engineering and maintenance, modifications and operations (MMO) units. The subsea EBIT margin widened to 7.6% in the quarter from 6.6% a year earlier, boosted by operational improvements and high activity at the U.S. umbilicals plant. Field Design's margin narrowed to 6% in the same period from 6.8% as improved engineering margins were tempered by challenges in the Norwegian MMO market.
Aker Solutions in the quarter adjusted capacity in its MMO workforce in Norway to counter the slowdown in the Norwegian market for offshore maintenance and modifications.
"We will continue to be vigilant about capacity in all parts of the organisation, while also seeking to create value for our shareholders and customers through reduced complexity and a ceaseless focus on operational excellence, cost control and financial performance," Araujo said.
Underlying factors that support a positive long-term outlook for offshore and deepwater oil and gas developments remain in place. The company will benefit in the long term from a shift toward more complex offshore resources. Aker Solutions maintains a medium-term guidance to grow with its key markets and at least maintain market share in its core subsea, engineering and MMO businesses. In subsea, the aim is to gradually move toward peer-group margin levels. Margins in engineering are expected to remain robust and they are anticipated to gradually recover in MMO.
Adapted from press release by Joe Green
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