Subsea 7 Defies Oil Sector Gloom with Strong Results
OSLO, April 29 (Reuters) – Oil services firm Subsea 7 reported surprisingly strong earnings and orders on Wednesday, sending its shares up more than seven percent despite warnings about persistent weakness in offshore business.
Subsea 7, which specialises in underwater construction, increased earnings and margins, and secured more new orders than the market had forecast, even though energy firms are continuing to delay projects following the slide in crude oil prices.
Oslo-listed Subsea 7 said its operating profit rose to $176 million from $160 million a year earlier, well above the average forecast of $122 million in a Reuters poll of analysts.
Its order intake of $1 billion was nearly twice what the market had expected.
Subsea 7 shares rose 7.4 percent in early trade and were up 4.4 percent at 0800 GMT, despite warnings from the company that its outlook was muted. In the last 12 months, the shares have fallen 25 percent.
"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 said.
"Revenue is expected to be significantly lower in 2015 compared to the record level reported last year and adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) margin is expected to decrease compared to 2014."
The company said its plan to cut costs has been progressing well and it will implement additional measures this year.
Although its new orders were lower than quarterly revenues, the company said it had won a series of new contracts, including in Britain, Australia, Angola and Norway.
(Reporting by Balazs Koranyi; editing by Stine Jacobsen and David Clarke)
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