Subsurface engineering and construction company Subsea 7 posted a smaller-than-expected drop in second-quarter operating profits yesterday, helped by a good North Sea performance.
The company, which employs about 1,000 people at Westhill, near Aberdeen, also painted an upbeat picture for future demand.
Oil service firms have been hit hard by the global crisis and lower energy prices, which have forced producers to slash spending but after a tough patch, some companies are seeing new orders coming in.
Subsea 7’s operating profits fell 10% year-on-year to £71.5million in the three months to June 30, a much better performance than analysts had predicted.
The firm said the North Sea region had performed well during the quarter.
Overall, it said the medium to long-term outlook for the subsea market continued to remain strong, but added: “There is no doubt that the current economic environment is challenging. There continue to be delays in project awards and a greater pressure on margins, driven by both lower volumes of work available and a push by the operators to cut costs in the supply chain.”
Even so, Subsea 7 said it was well positioned to remain competitive in the current environment and the future.
The company’s order backlog fell to £1.76billion from £2.24billion a year ago but beat analyst forecasts of £1.55billion.
Cost cutting allowed Subsea 7 to keep earnings per share at 33p for the quarter, against 34p a year ago and beating analyst forecasts for just 21p.
Total revenue for the second quarter of 2009 came in at £386.3million, compared with £363million a year earlier, taking the latest half-year figure to just under £752million; a 6.8% increase from the first six months of 2008.
Operating profits over the six months to June 30 totalled £121.2million, against £130.9million a year earlier.
Subsea 7’s Westhill site supports the company’s global activities, with the north-east staff forming part of a 5,500-strong international workforce.
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