Aker Solutions ASA, the offshore engineering company controlled by billionaire Kjell Inge Roekke, said profit and margins dropped in the third quarter as activity in Norway fell.
Net income fell 24% from a year earlier to 265million kroner, while the Oslo-based company’s margin on earnings before interest and tax fell to 5.6% from 6.6%, it said in a statement. At the same time, revenue rose 22% to 8.3billion kroner.
“Margins were held back by overcapacity caused by a steep drop in activity in the maintenance, modifications and operations market in Norway,” Aker Solutions said in its statement. “Aker Solutions sees a risk of delays as oil companies scale back some investments. The company anticipates this focus on capital discipline to continue over the next one to two years.”
Aker Solutions has cut hundreds of jobs in its maintenance, modifications and operation division as oil companies, led by its biggest client Statoil ASA, cut planned spending as they seek to boost shareholder returns amid rising costs. Investments in Norway’s offshore industry, Aker Solutions’ biggest market, could fall by as much as 18 percent next year, according to forecasts by the country’s statistics bureau.
Aker Solutions’ chief executive officer Luis Araujo has vowed to boost margins to catch up with rivals such as FMC Technologies Inc. after spinning off the subsea, engineering, umbilicals and MMO units into a new company in September.
While the company expects lower activity in the North Sea until 2016, it said today that “business should prove more resilient” in sub-Saharan Africa, Brazil, Asia and the Middle East. “Aker Solutions’ growth over this period will likely be driven mainly by Brazil and Africa, where the company is well- positioned in the deepwater and subsea segments,” it said.
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