Aker to 'Raise Quality Game'

09 December 2011

The Norwegian oilfield services contractor reported a loss in the third quarter after incurring heavy costs of Nkr500 million ($87 million) on delayed deliveries of subsea equipment in Brazil.

Aker has been forced to revise delivery schedules for major subsea projects with Brazilian state-owned oil company Petrobras due to quality issues and a lack of contracting capacity.

Chief executive, addressing analysts at the company’s Capital Markets Day admitted these issues will "make it challenging to secure a lift in margins in the near term”.

However, he said "we remain confident in the longer term margin improvement targets we have set out”.

"We are accelerating our investments in technology and in strengthening our organisation, and we continue to address the quality issues we have identified in the company,” he said.

Aker also intends to step up the pace of investments in new fabrication capacity and assets for its service businesses to boost profitability.

The company is maintaining its target of 9% to 15% annual revenue growth from 2011 to 2015 on bullish expectations for the oilfield services sector, with analysts from Barclays Capital predicting a 10% rise in global exploration and production spending to $598 billion next year, driven by higher oil prices.

"We missed some of our financial targets this year, and the world economy is associated with uncertainties, but our growth targets remain unchanged,” Eriksen said.

"The global energy trends project increased demand for oil and gas and high energy prices long term. Aker Solutions is positioned to grow on the back of this. Additionally, we have a potential to increase our market shares and the financial muscle to grow further through acquisitions or partnerships."

Aker has increased its order backlog by 23% over the past year and is targeting an increase of three to four percentage points in its Ebitda margins by 2015.