Revenues at Norwegian oil service firm Aker Solutions fell 20% in first-quarter 2017 from a year earlier, hit by weak demand and the ending of some projects, the company said May 9.

While most oil companies have reported better-than-expected first-quarter earnings, helped by a rise in oil prices, and while more projects are being approved, subsea developments normally come at a later stage in an industry upturn.

Aker, controlled by Norwegian billionaire investor Kjell Inge Roekke, reported first-quarter revenues of 5.2 billion Norwegian crowns (US$601.7 million), down from 6.5 billion Norwegian crowns (US$751 million) in first-quarter 2016, with revenues at its key subsea business dropping 27% year-on-year.

The company repeated its guidance for overall full-year revenues to be between 10% and 15% lower than in 2016, but said it saw signs of recovery and was currently bidding for contracts worth about 50 billion crowns (US$5.8 billion).

Project revenues for 2017 are expected to be down between 15% and 20% from 2016, it added.

“While we continue to face market uncertainty, the signs of improving brownfield activity and expectations of key subsea projects moving forward bode well for 2018 activity levels,” CEO Luis Araujo said.

The company’s backlog stood at 30.7 billion crowns (US$3.5 billion) at the end of first-quarter 2017, with quarterly intake of 4.6 billion crowns (US$531 million), including a FEED contract from Statoil for Phase 2 development of Norway’s giant Johan Sverdrup Field.

Lower project breakeven costs were likely to spur more projects being sanctioned by oil companies this year, Aker added.

Aker said it expected underlying core profit (EBITDA) margins for 2017 to be slightly down from the current levels of 7% due to continued market weakness, partly offset by its improvement program.

The company said it had achieved more than two-thirds of its 9 billion crowns (US$1 billion) cost savings plan by the end of the first quarter.

—Reuters