Despite “negative performance” in its renewables work, Aker ASA says it will not change its strategic direction.
Aker’s chief executive, Øyvind Eriksen, is “confident” in a strong portfolio composition as his firm announces losing around NOK 1.8 billion (£140 million) in the fist half of the year.
The chief executive explains that “private capital must be mobilized at a much greater scale” in order to counteract growing global emissions, however, he concedes there are challenges in achieving this.
Mr Eriksen explains: “Shareholders are more concerned with short-term returns in the form of dividends and share buybacks, rather than large investments in green and more unpredictable projects.”
The Aker boss called for “a more integrated public-private collaboration” to improve what he called the “risk and reward balance” to attract private equity to green projects.
“Hopefully, companies like our own ICP [Industry Capital Partners] can contribute to that by engaging more integrated with industrial players, like Aker Solutions, to manage risks and opportunities in a more value-accretive way than what the situation is today,” Mr Eriksen adds.
Net asset value for the firm also dropped marginally, by 2.3% adjusted for dividend, since its last report at the end of the first quarter of the year. However, since the start of the year, Aker’s net asset value has dropped by 12.8%.
Despite its share prices dropping 13.3% in the first half of the year, Aker ASA has reported that its portfolio companies, like Aker BP and Aker Solutions, had “one of the strongest operational quarters on record.”
In his letter to shareholders, Mr Eriksen outlines the difficult financial landscape that his firm, and many others, has been battling with in 2023: “Continued inflation concerns, an ongoing war in Europe, regional bank failures, a debt ceiling debate, fears of recession and a wave of optimism surrounding AI – it has certainly been an eventful first half of the year for capital markets.”
Although the figures throughout the firm’s report paint a dreary picture, the chief executive was please with the “bread and butter” of his company’s portfolio, Aker BP, which recorded record high production in the second quarter, and Aker Solutions, with robust order intake and revenue projections.
Aker Solutions
Despite the “negative performance” reported in Aker’s renewables work, its portfolio company, Aker Solutions, managed to deliver increased revenues in the first half of the year.
Aker Solutions continued its “record high” order backlog, which was valued at around £7.59 billion (NOK 100 billion) at the end of the second quarter.
This order backlog is providing “good visibility for activity-levels for the coming years,” Aker says.
Aker BP
Aker’s joint venture with the UK supermajor BP, Aker BP, delivered a record high production volume of 481 thousand barrels of oil equivalents per day (mboepd) in Q2.
This makes a 6% increase in the previous quarter’s record-breaking production levels, which was reported at 453 mboepd, the company has increased its production guidance for the full year following these results.
Aker says that the increased productivity from its joint venture came from the Johan Sverdrup field, which represents 30% of Norway’s daily oil and gas production.
Aker BP holds 31.6% ownership in the Johan Sverdrup field.
