The company’s second quarter revenue decreased to US$1,352m, reflecting the difficult industry conditions and declining workload. Adjusted EBITDA of US$275m and margin of 20.3% included the US$100m charge related to the cost reduction programme. Excluding this charge Adjusted EBITDA was $375 million and the margin was 27.7%.
“Subsea 7 delivered good operational and financial results in the second quarter, driven by strong execution and cost control discipline in a challenging market environment,” said Jean Cahuzac, CEO. “During the quarter Subsea 7 announced a cost reduction programme to resize the fleet and workforce in line with the declining workload. A US$100m charge related to the resizing was recognised in the second quarter, out of an estimated total charge of US$140m.”
Global vessel utilisation increased to 82% in the second quarter from 68% in the prior quarter as the offshore phase of several projects progressed significantly and activity in the North Sea increased in part due to the seasonally better weather.
Order intake was US0$0.9bn reflecting Subsea 7’s competitiveness in a market that remained “subdued”, while order backlog at the end of June was US$7.2bn, US$0.4bn lower than at the start of the quarter, with no material impact from foreign exchange movements in the period.
Despite this, the company says it made progress on several of its offshore projects in both the Northern Hemisphere and Life of Field Business Unit and the Southern Hemisphere and Global Projects Business Unit.
Going forward, the Group will reduce its capacity by 2,500 people and 12 vessels by early 2016, delivering expected annualised savings of approximately US$400m in employee related costs and about US$150m in vessel costs.
By Rachael Doyle
