Profits sink after Aker write-down

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Norwegian oil and gas company Aker Solutions reported weaker than expected quarterly results on Thursday, with the earnings before interest, taxes, depreciation and amortization (EBITDA) falling to NOK 429 million (USD 69.2 million), compared with NOK 786 million on the same time last year. The results followed the announcement earlier this year that the company would split into two entities, and a NOK 1.6 billion write-down of loss-making unit Aker Oilfield Services’ value.

The company finished the quarter with an EBITDA excluding non-recurring items of NOK 936 million, versus NOK 813 million at the same time last year, reported newspaper Dagens Næringsliv (DN). Disregarding write-downs and one-off costs, the result was lower than the expected EBITDA of NOK 1.065 million. The total revenues were NOK 12.956 million, while the operating result was minus NOK 944 million.

While the results were worse than expected, losses were anticipated after Aker Solution’s announcement of the NOK 1.6 billion write-down last week. The Norwegian government was among the shareholders affected, which bought a 12 percent stake in Aker Solutions in 2007 to save jobs. Two years later, industrialist Kjell Inge Røkke’s Aker company sold the troubled Aker Oilfield Solutions, referred to by analysts as “Røkke’s garbage,” to Aker Solutions. He thereby transferred the risk onto Aker Solutions and its shareholders, including the furious government.

Aker Solutions also revealed the pro forma accounts for the company’s two new entities, a new Aker Solutions and an investment company called Akastor. The second quarter pro forma revenue for the new Aker Solutions was NOK 8.1 billion, up from NOK 7.5 billion on the same time last year, due to a 13 percent increase on subsea equipment and services sales. The company’s EBITDA increased to NOK 592 million, from NOK 481 million.

Pro forma revenue for Akastor was up 25 percent to NOK 6 billion, but with an EBITDA loss of NOK 129 million, against a NOK 303 million profit on the second quarter of 2013. Akastor will retain Aker Oilfield Services.

newsinenglish.no staff