Aker Solutions ASA: Fourth-Quarter Results 2019
OSLO, Norway, Feb. 7, 2020 /PRNewswire/ -- Aker Solutions increased the 2019 fourth quarter revenue to NOK 7.3 billion, a rise of 6 percent compared with the fourth quarter 2018, as the company executed projects according to schedule and won awards in a competitive market.
4Q 2019 Financial Highlights
With high activity in projects for both Norwegian and international clients throughout the year, Aker Solutions reported revenue growth in the fourth quarter as well as for the full year.
Investments in digitalization and low-carbon solutions have proved key differentiators in securing new orders. The company launched its updated "20/25/30" strategy in October 2019.
"Delivering cost-efficient, low-carbon solutions is at the heart of our offerings as our customers are increasingly looking at ways to reduce their carbon footprint," said Luis Araujo, chief executive officer of Aker Solutions. "We are already involved in major projects related to carbon capture, electrification of production assets, subsea gas compression and unmanned platforms - all part of our portfolio of low-carbon solutions that have the potential to significantly reduce or remove emissions".
Orders totaled NOK 5.6 billion in the quarter, bringing the backlog to NOK 25.4 billion. Key awards included a contract from Aker BP to deliver a subsea production system for phase two of the Ærfugl field in the Norwegian Sea. Aker Solutions also secured a frame agreement for maintenance and modification services from Vår Energi for its Jotun, Balder and Ringhorne assets, which the company has serviced for more than 19 years already.
The company experienced another year of record demand for front-end engineering services. In the fourth quarter Aker Solutions was awarded 40 front-end contracts. This brings the total for 2019 to a record 151, with overseas projects accounting for one third of the total.
Aker Solutions continues to pursue energy solutions that minimize the environmental footprint, with carbon capture and floating wind at the forefront. During the quarter, the company increased its ownership share to 25 percent in Principle Power, which is one of only two companies with a proven technology concept for offshore floating wind.
Revenue and EBITDA
Revenue rose to NOK 7.3 billion in the quarter from NOK 7 billion a year earlier, supported by progress and deliveries on key projects. The EBITDA was NOK 434 million, compared with NOK 483 million in the fourth quarter of 2018. Excluding special items, the EBITDA was NOK 480 million with a margin of 6.5 percent compared 7.1 percent in the same period last year, reflecting a higher proportion of brownfield work in the revenue mix. EBITDA margins in 2019 include IFRS 16 effects.
Aker Solutions has two reporting segments: Projects and Services. Revenue in Projects rose 1 percent to NOK 5.7 billion in the quarter from NOK 5.6 billion a year earlier, mainly driven by the field design sub-segment. Excluding special items, EBITDA margin was 6.6 percent in the quarter versus 6.2 percent a year earlier.
Revenue in Services was NOK 1.6 billion, up 24 percent from NOK 1.3 billion in the same quarter last year, with the increase driven by international growth in the company's production asset services sub-segment. The EBITDA margin excluding special items was 10.3 percent in the quarter, down from 14.6 percent a year earlier.
With a liquidity buffer of NOK 6.3 billion, the financial position of Aker Solutions is solid. However, the board has proposed that no dividend payment should be declared for 2019 - still deeming it prudent to exercise caution and to position the company to take advantage of the opportunities presented by the ongoing energy transition.
The global markets remain active, but very competitive. Tendering activity remains high in main markets, and Aker Solutions is currently bidding for contracts totaling about NOK 60 billion. Projects are being sanctioned, but many contracts are taking longer to be awarded.
The company expects some key projects to be awarded over the next six to nine months.
In the longer term, Aker Solutions anticipates an increase in global energy demand and that investment efforts in sustainable energy solutions will be rewarded.
After delivering strong top line growth of 16 percent last year, and 30 percent over the last two years, Aker Solutions expects overall 2020 revenue at around the 2018 level.
The company expects the 2020 EBITDA margin to remain around underlying 4Q levels, reflecting delayed project sanctioning, continued progress on our new backlog - won in a very competitive market - as well as a different revenue mix with a high share of lower-margin brownfield activity.
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The following files are available for download:
4Q 2019 Presentation
SOURCE Aker ASA