TechnipFMC Expects $2.4B Impairment Charge

TechnipFMC has revealed that it expects approximately $2.4 billion of non-cash asset impairment charges to impact its results in the fourth quarter.

The company outlined that it expects an impairment charge of around $1.7 billion in its subsea segment, primarily due to reduced market capitalization, and an impairment charge of around $700 million in its surface technologies segment, primarily due to a change in North American outlook.

TechnipFMC revealed in August last year that its board had unanimously approved a plan to separate into two companies. TechnipFMC began operating as a unified company in January 2017, following the completion of the FMC Technologies Inc. and Technip SA merger.

In the immediate aftermath of TechnipFMC’s demerger announcement, the plan was dubbed “bold” by energy research and consultancy firm Wood Mackenzie.

“It is a bold move,” Mhairidh Evans, a principal analyst at WoodMac, said in a statement sent to Rigzone in August last year.

“We think it’s less about ‘correcting’ something that is not working today, rather with an eye on the longer game ahead. Essentially, the demerger is a proactive positioning move for a longer-term market shift,” Evans added.

Last month, TechnipFMC announced that its planned transaction to separate into two companies was “well on track” for completion in the first half of 2020.

According to TechnipFMC, which anticipates completing the transaction in the second quarter of this year, the two companies will comprise Technip Energies (also referred to as SpinCo) and TechnipFMC (also known as RemainCo).

Technip Energies will have approximately 15,000 employees and would be one of the largest E&C pure-plays, TechnipFMC outlined. The company will be incorporated in the Netherlands with headquarters in Paris and listed on the Euronext Paris exchange, TechnipFMC said.

RemainCo will have approximately 22,000 employees and would be a fully integrated technology and services provider, according to TechnipFMC. This company will remain incorporated in the United Kingdom with headquarters in Houston and listed on both the NYSE and Euronext Paris exchange, TechnipFMC noted.

To contact the author, email andreas.exarheas@rigzone.com