Aker Solutions ASA, a Norwegian oil services provider, said talks with oil companies on changes to large projects are becoming more difficult as producers cut spending.
The company, controlled by billionaire Kjell Inge Roekke, has been impacted by “unfavorable outcomes” in talks on a few subsea projects and a slowdown in subsea services, the Oslo-based company said in a first-quarter statement Wednesday.
“In the current market environment, those discussions become harder than before because the procurement people are more concerned about protecting the company,” Chief Executive Officer Luis Araujo said in an interview. The talks were with customers about variations, bonuses and additions to scope on long-term large orders, he said, declining to identify the projects.
A more than 40 percent slump in oil prices since June has forced oil companies to cut spending. Companies that design and construct underwater systems for oil producers are facing a slowdown in orders as customers delay projects.
Aker Solutions order backlog rose to 48.3 billion kroner ($6.3 billion) from 39.6 billion kroner a year earlier. That’s still short of the 53.9 billion kroner in orders it reported in the second quarter last year. Net income unexpectedly fell to 213 million kroner in the first quarter from 281 million kroner a year earlier, missing a 302 million-krone estimate of 9 analysts surveyed by Bloomberg.
The company’s margin on earnings before interest and tax narrowed to 4.8 percent in the period from 7 percent a year earlier.
“We’re very focused on our operation and cost reduction measures to make sure we protect our margins and move them up where we can,” Araujo said. “We are very cost-conscious these days and looking for ways of being more productive.”
The company’s shares rose 2.2 percent to 46 kroner as of 1:08 p.m. in Oslo. The stock is up 11 percent this year.