Offshore engineering group Subsea 7 saw its operating profits brought down by the company’s problems in Brazil – but said its record order book would support growth to compensate.
The company admitted earlier this year that it had suffered ‘unacceptable losses’ due to problems with its Guará-Lula project in the Santos basin.
But today it posted second quarter results that showed, despite a $300million loss provision for the Guará-Lula situation, it was on target to show adjusted earnings progress.
“‘While I am disappointed with the $300 million loss provision on the Guará-Lula NE project which we recognised during the quarter, I am pleased with project execution and our financial results throughout the rest of the business,” said chief executive Jean Cahuzac.
Net operating income fell 83% to $41million during the second quarter of 2013, with half year figures down from $400million in 2012 to less than half that this year.
However, the company’s order book has swelled to $10.4billion, with a further $2billion announced for the next quarter and tendering expected to remain high.
The $1billion Guará-Lula project, awarded by Petrobras to Subsea, is one of the largest engineering, procurement and installation contracts ever issued in Brazil, and sees the company installing four riser systems with submerged buoys.
The company said it had now entered the offshore phase of the project, with the first buoy being installed, but weather conditions in the Santos basin had hampered progress.
However, Subsea 7 has also seen three contracts renewed in Brazil with Petrobras, along with being awarded contracts for three new vessels.
“In June, we announced a plan to improve our margins in Brazil and we remain disciplined in our bidding approach for new projects with a focus on risk management and profitability,” said Cahuzac.
“In this context, I am pleased with the PLSV renewal and new-build awards we have recently announced in this territory.”
Subsea’s North and Norwegian Sea projects were boosted by high tendering, with the 71st unit having been recently launched at the facility in Wick, while the Knarr project entered its offshore phase.