Profits nosedived at Subsea 7 in the first half of 2018 despite a steady recovery in the market.
The oil field service firm said it had suffered as a result of fewer large projects being sanctioned, lower pricing on new awards and lower activity in the renewables and heavy lifting segments.
The Luxembourg-registered business, which has offices in north-east Scotland, posted pre-tax profits of £54 million in the first six months of 2018, against £310m a year ago.
Revenues came to £1.49 billion, up 2.5% year-on-year.
Subsea 7 said tie-back projects were leading the recovery and that its order backlog had increased to £4bn.
For its renewables and heavy lift business, revenue was £326m in 1H 2018 compared to £413m last year. The reduction in revenue was primarily due to reduced activity on the Beatrice wind farm project, offshore UK, which neared completion.
Active vessel utilisation was 80% in the second quarter, up 22 percentage points from the first quarter reflecting the seasonality of offshore operations in the
North Sea.
Subsea 7 chief executive Jean Cahuzac said: “We achieved good order intake in the second quarter, reflecting our strong competitive position and ability to provide clients with the right solutions to enable projects to proceed. Seven awards were announced in the period with new projects offshore West Africa and Egypt and in the US Gulf of Mexico and North Sea, taking our book-to-bill ratio to 1.2 times. We continue to expect a gradual recovery of offshore oil and gas awards, led initially by tie-back projects and followed by larger greenfield developments.
“Reported revenue of £910m and Adjusted Ebitda of £140m resulted in Adjusted Ebitda margin of 16%. This represented a three percentage point improvement on the prior quarter, reflecting a seasonal increase in operational activity in the North Sea.
“Our strategic focus on strengthening and growing our business has progressed well in the quarter with the successful completion of our acquisition of Siem Offshore Contractors (SOC) and its integration into our Renewables and Heavy Lifting Business Unit. We have made progress towards forming a joint venture with Schlumberger to develop our integrated service offering and we expect to complete this before the end of the year. We have a strong financial and liquidity position that enables us to pursue long-term investment opportunities that create sustainable value for all our stakeholders.”
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