Subsea 7 cost reduction effort paying offCompany News // March 3, 2017
Subsea 7's Chief Executive, Jean Cahuzac, says the company "delivered good operational and financial performance in 2016, despite the continued industry-wide downturn in activity."
Mr Cahuzac said the company's performance "reflected successful implementation of our cost reduction measures."
"We experienced keen interest in our innovative technology and collaborative solutions, including our industry alliances and client partnership agreements," he said.
"Our differentiated offering has been effective in strengthening our market position throughout the downturn and our robust financial position has enabled us to continue to invest in our technology and assets.
"In 2016 we drew close to completing our multi-year new-build vessel programme and the last three vessels were delivered in January 2017. We acquired a specialist polymer lining company, Swagelining, and continued to invest in our five strategic technology programmes to develop cost-effective solutions for our clients.
"Looking ahead to 2017 we are well positioned to build on our strengths. We are seeking to expand our presence in renewable energy, and in January 2017 made an offer to acquire Seaway Heavy Lifting, a company in which we already hold a 50 per cent interest. We remain focused on finding better, more efficient solutions to enable our clients to sanction their projects in a lower oil and gas price environment."
Subsea 7's ffull year 2016 adjusted EBITDA percentage margin increased to 32 per cent for the full year 2016, driven by cost discipline, operational performance and successful project completions. Its net cash position was US$1,249 million at 31 December 2016, with US$1,046 million in cash generated from operations in 2016.
Guidance for the full year 2017 is unchanged. Revenue is expected to be broadly in line with 2016, supported by current backlog. Adjusted EBITDA percentage margin is expected to be significantly lower than that achieved in 2016. This reflects lower margins from projects tendered during the market downturn, fewer large projects in the final stages of execution and a higher proportion of procurement costs.
Assuming the oil price improvement is sustained and the cost reductions identified by the industry are consistently achieved, there is cause to believe that the number of SURF project awards to the market could increase within the next 12 months, the company said.