Subsea 7, the London-based seabed-to-surface contractor that is listed in Oslo, increased its net profit in the first quarter of 2015 (1Q15), but warns of a challenging outlook.
Group net profit rose to USD151 million in 1Q15 from USD131 million a year earlier, while revenues fell to USD1.18 billion from USD1.67 billion.
The continuing difficult market conditions led to a subdued order intake of USD1 billion and the order backlog consequently declined to USD7.6 billion by the quarter’s end, which included an adverse foreign exchange impact of USD400 million, the company said in a statement.
“Net debt increased by USD283 million from the 2014 year-end position, reflecting the timing of payments for the newbuilding programme and movements in working capital in the quarter, largely due to the normal phasing of project related cash receipts and payments,” said chief executive officer Jean Cahuzac in his quarterly report.
“Contract awards to the market continue to be delayed, reflecting the low oil price environment and resultant capital expenditure reductions by oil companies. Subsea 7 is positioned competitively for the projects that are still expected to be awarded to the market in 2015,” he said.
“As guided previously, revenue is expected to be significantly lower in 2015 compared with the record level reported last year and the adjusted EBITDA margin is expected to decrease compared with 2014. Cost-reduction measures to more closely align Subsea 7’s cost base to current market conditions are making good progress and additional measures will be implemented in 2015,” Cahuzac said.
In 2014, the group’s revenues totalled at USD6.87 billion and it reached an adjusted EBITDA margin of 21%, according to the company’s 4Q14 and full-year 2014 result statement issued in March.
Subsea 7 has a fleet of more than 40 vessels, ranging from high-performing pipelay and heavy construction enablers to versatile support vessels for flex-lay, light construction, and diving and remote intervention activities.