Kvaerner, a Norwegian builder of oil platforms, aims to increase its revenue by some 40% by 2022 by expanding abroad, the company said Oct. 23 after reporting a sharp decline in third-quarter earnings that drove down its shares.
Kvaerner’s quarterly earnings before interest, tax, depreciation and amortization (EBITDA) fell to 76 million crowns (US$9.19 million) from 245 million crowns a year ago.
“In a period where some recently awarded projects are not yet recognizing margin and with less effects from milestones and incentives in other projects, this influences EBITDA and margins, as expected,” the company said in a statement.
At 09:28 GMT, the company’s shares traded 4% lower at 12.32 Norwegian crowns ($8.27), a 13-month low.
However, Kvaerner said its prospects are improving and there was a stronger market outlook.
The construction of FPSO vessels for the oil industry is among the most promising opportunities, the company added.
Kvaerner CEO Karl-Petter Loeken said he aims to increase revenues to 10 billion crowns ($1.25 billion) by 2022 from an expected 7 billion ($846 million) in 2018 by consolidating the company's position at home and growing internationally.
Kvaerner is also present in the United States, Canada, Britain, Finland and Russia, where it hopes to achieve growth.
Kvaerner maintained its 2018 outlook and said its EBITDA margin in the fourth quarter was expected to be “somewhat lower” than it was in the third quarter, which was 5.2%, down from 15.1% a year ago.
The company’s EBITDA and EBITDA margins have been falling since third-quarter 2017 as the company was wrapping up some large contracts, including at Norway’s giant Johan Sverdrup oil field, and no longer benefited from incentive payments.
Loeken declined to comment on the 2019 outlook, but said the company aimed to reduce its costs further to improve profitability, while competition remained “fierce.”
More consolidation among oil industry suppliers could help, he added.
“I think if you look some years ahead, further consolidation is probably a natural answer,” Loeken told Reuters.
Kvaerner’s CEO declined to say whether the company was having any talks with its competitors, which include Aibel, 32% owned by Swedish private equity group Ratos. ($1 = 8.2692 Norwegian crowns)
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