Aker Solutions profit drops, but revenues rise on increased activity

Norwegian engineering company Aker Solutions recorded a decrease in its third quarter 2019 profit, but its revenues jumped by 9% driven by increased activity levels compared to the same period last year.

Aker Solutions said in its quarterly report on Wednesday that its net income in the third quarter 2019 was NOK 93 million ($10.2M), compared to a profit of NOK 155 million ($16.9M) in the same period last year.

Third-quarter revenue rose 9% to NOK 7.1 billion in the quarter from NOK 6.5 billion a year earlier, driven by increased activity levels in both the Projects and Services segments.

Aker Solutions has two reporting segments: Projects and Services.

Revenue in Projects rose to NOK 5.6 billion in the quarter from NOK 5.2 billion a year earlier, mainly driven by high activity level in the Field Design sub-segment compared to the same period last year.

Revenue in Services rose to NOK 1.5 billion in the quarter from NOK 1.3 billion a year earlier, driven by international growth in the company’s Production Asset Services sub-segment.

“We delivered another quarter of revenue growth compared to last year, reflecting good execution and high activity levels in field design and subsea on the back of work won over the last 18 months,” said Luis Araujo, chief executive officer of Aker Solutions.

“The market is still competitive, but we continue to see high tendering activity in our main markets. Despite the fact that projects take longer to be awarded, we expect several prospects to be concluded over the next six months,” he added.

Orders totaled NOK 4.7 billion in the quarter, bringing the backlog to NOK 27.4 billion.

The order intake was primarily driven by smaller awards and growth in existing contracts. Aker Solutions won 37 front-end orders in the period, bringing the total for the first three quarters of the year to 111, slightly higher than the record number from last year.

According to the company, the outlook for oil services remains competitive. Tendering activity is high, with a good balance between regions and segments. Aker Solutions is currently bidding for contracts totaling about NOK 55 billion. The company expects visibility on order intake to improve, as several prospects are likely to be concluded over the next six months.

Aker Solutions reported revenue growth of 12 percent in 2018 and the company expects its 2019 revenue to increase at a similar rate.

“After delivering nearly 25 percent revenue growth and stable margins over the past two years, we expect to see slightly lower revenues and margins next year,” said Araujo.

“This is mainly driven by the order intake in 2019 and the phasing in of new work won in a very competitive market. We believe we are well positioned to win new work and to deliver a solid financial and operational performance in 2020.”