With a year-end backlog of 17 billion euros (US$18.8 billion) growing income from subsea operations and greater than expected cost savings, Technip is bucking the bad-news bear market trend.

The Paris-based project management, engineering and construction company showed its resilience amid an otherwise profit-gobbling downturn by unveiling not only a strong backlog of projects but also a strengthened balance sheet and a 14% jump in revenue, bringing its 2015 revenue to 12.2 billion euros ($13.5 billion). For fourth-quarter 2015, Technip saw its net income rise 27% to 102 million euros compared to a year earlier as the company’s revenue jumped 11% to 3.1 billion euros ($3.4 billion)

“In 2015, Technip showed itself to be resilient and proactive in an unprecedented market environment, executing on key projects for our clients, progressing on our cost-reduction program and advancing our strategy,” said Thierry Pilenko, chairman and CEO of the Paris-based company.

The performance, which beat analysts’ expectations and sent the company’s stock price soaring, comes as the global oil and gas industry cuts costs to salvage budgets as lower commodity prices—the result of a supply-demand imbalance—eat into profits, stall projects not far in the development phase and slow activity, leaving millions jobless.

Yet, Technip closed out the year with a 2.8 billion euro order intake in the fourth quarter, bringing the total to 7.6 billion euros for 2015, with awards secured offshore Brazil, in the U.S. Gulf of Mexico and Russia.

The order intake was almost triple Kepler Cheuvreux’s forecast, Bloomberg reported Feb. 25. “The positive surprise from this publication comes from the backlog,” Kevin Roger, an analyst at Kepler Cheuvreux in Paris, said in a note to clients.

Performance highlights included:

  • 7.6 billion euros order intake in 2015, including 2.8 billion euros in the fourth quarter. Most of the order intake was for Technip’s onshore/offshore segment, which includes construction and logistics for the Yamal LNG project.
  • A 15.3% increase in subsea revenue to 1.5 billion euros for fourth-quarter 2015, compared to the previous year. For the year, subsea adjusted revenue rose 20% to 5.9 billion euros ($6.5 billion). Revenue for the onshore/offshore segment also increased 8.4% for the year to 6.3 billion euros ($6.9 billion).
  • Vessel utilization rate for the quarter was 74%, which Technip said was “in line” with the previous year but down compared to the previous quarter’s 89%.
  • Increased cost saving target from 830 million euros to 1 billion euros ($1.1 billion), while increasing R&D spend and generating more than 1 billion euros of cash flow over the year. As part of its restructuring plan, Technip said in July that it would cut 6,000 jobs. Adjusted capex in 2015 was 295 million euros, down from 376 million euros, which Technip said shows its discipline on already initiated investments.

“Our diversified backlog of €17 billion, with €7.3 billion in subsea and €9.7 billion in onshore/offshore, combined with higher cost savings, focus on working capital management and lower net capex will help protect our margins and cash flow in the coming years,” Pilenko said.

But Technip is not letting its performance blind it from today’s oil price reality.

Technip expects its clients’ capex on new projects to stay below 2014 levels, but Technip foresees a pickup in front-end work for upstream projects starting in late 2016.

“Oil and gas operators are currently focused on completing major projects launched over the past three to five years. The completion of these should provide cash flow headroom which would enable investment to resume compensating inevitable reservoir depletion,” Pilenko said. “Most important, the significant improvements on project economics brought by early engagement (notably by Genesis and the Forsys Subsea JV) are increasing client confidence in upstream project returns.”

Meanwhile, Technip plans to continue building a “broadly-based business with drivers beyond just large onshore, offshore and subsea projects” by investing in technology, equipment and consulting activities. In March 2015, Technip and FMC Technologies formed an alliance called Forsys Subsea focusing on early involvement in the concept selection phase of FEED and design, life-of-field well surveillance, monitoring, data interpretation, advisory services and joint R&D.

“We will continue to seek early stage engagement with clients, committing to drive costs out through the application of technology, simplicity and standardization, and to an efficient use of our own supply chain,” Pilenko said. “Internally, we are controlling our costs, our cash, our projects and our capex, maintaining a strong balance sheet and therefore our capacity to reinforce our leadership. Overall, we are ready to seize opportunities in this unprecedented market environment.”

Velda Addison can be reached at vaddison@hartenergy.com.