Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aker Solutions ASA (AKRYY, Financial) reported a 35% increase in third-quarter revenue, reaching NOK13.2 billion, driven by solid operational performance.
- The company announced an extraordinary dividend of NOK21 per share, aiming to distribute about NOK10 billion to shareholders.
- Successful completion of significant project milestones, including the anchoring of the Johan Castberg FPSO and electrification of the Troll West platforms.
- The tender pipeline increased to NOK82 billion, indicating strong future project opportunities across oil and gas, renewables, and decarbonization sectors.
- Aker Solutions ASA (AKRYY) maintains a strong financial position with a net cash position of NOK11.7 billion, enabling continued investment and shareholder returns.
Negative Points
- Net income, excluding special items, decreased to NOK812 million from NOK1 billion a year ago.
- Operational cash flow was negative NOK519 million, primarily due to a working capital reversal of about NOK1.2 billion.
- The legacy renewable portfolio continues to negatively impact margins, despite overall segment growth.
- Net financial items were adversely affected by developments in the SLB share price and associated exchange rates.
- The company faces challenges in the renewables sector, with some projects experiencing delays, such as the Norfolk project not obtaining a CfD in the latest UK round.
Q & A Highlights
Q: What was the reason behind declaring an extraordinary dividend, and should we expect excess cash to be distributed to shareholders over other investment opportunities?
A: The decision for an extraordinary dividend was influenced by shareholder feedback and the company's strong financial position. The ordinary dividend policy will continue, and while the company remains open to investment opportunities, capital discipline remains a priority. - Idar Eikrem, CFO
Q: Are you recognizing profit on all Aker BP projects currently?
A: Profit recognition has started on three out of four projects in the new build and field development segment, with the last one expected to begin in the fourth quarter. - Idar Eikrem, CFO
Q: What is driving the NOK20 billion increase in the tender pipeline, and what types of projects are included?
A: The increase is across all segments, including oil and gas, renewables, and CCS. There is significant activity in offshore wind, electrification, and hydrogen projects, with a strong consulting portfolio supporting future opportunities. - Kjetel Digre, CEO
Q: Why is the revenue growth guidance only for more than 40% despite having revenues in hand implying higher growth?
A: The guidance reflects a cautious approach, with expected growth between 40% and 45%. The margin includes contributions from the OneSubsea JV, which impacts EBITDA through equity accounting. - Idar Eikrem, CFO
Q: Can you provide some color on the expected activity for 2025 given the strong backlog?
A: While formal guidance will be provided later, high activity levels are expected to continue into 2025 due to the robust backlog. - Idar Eikrem, CFO
Q: Are you targeting any new FPSO refurbishment projects, and what is your involvement with the Wisting project?
A: Aker Solutions is involved in FPSO refurbishment projects and is actively seeking new opportunities. The company is also engaged in studies for the Wisting project, eager to contribute its capabilities. - Kjetel Digre, CEO
Q: How are legacy renewables projects affecting margins, and when are they expected to be completed?
A: The HVDC topsides projects at Stord yard are progressing well and are expected to be completed and installed by 2025. These projects currently weigh on margins but are on track for completion. - Kjetel Digre, CEO
Q: What is considered a comfortable cash position for Aker Solutions post-dividend, and how does this relate to working capital normalization?
A: Aker Solutions aims to maintain a strong balance sheet with a net cash position, supported by cash generation and facilities in place to manage working capital variations. - Idar Eikrem, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
