28 April 2017
Semco Maritime still challenged in 2016 by oil and gas markets under pressure
Oil and gas prices stabilised at a low level in 2016, and this did not encourage new industry activity or investments by Semco Maritime’s customers. The low demand entailed a decline in Semco Maritime’s revenue to DKK 1,598 million compared to DKK 1,744 million in 2015.
The revenue decline of 8% in 2016 was smaller than the decline in 2015, and the positive developments within our business areas Offshore Wind and Renewables contributed to accommodating the negative impact from the oil and gas markets.
Earnings were lower as a consequence of the revenue decline and increased price pressure in the oil and gas business as well as significant restructuring costs related to the group’s adjustment of capacity to the lower activity level and additional impairment of goodwill. EBITDA before special items came to a loss of DKK 47 million against a profit of DKK 9 million in 2015. The result for the year declined to a loss of DKK 128 million against a loss of DKK 85 million in 2015.
Despite the negative result for the year, Semco Maritime improved the group’s cash flows from operating activities to an inflow of DKK 3 million from an outflow of DKK 49 million in 2015. The improvement was primarily attributable to a reduction in working capital of DKK 92 million against DKK 15 million last year.
”The oil price has had a significant impact on the oil and gas industry since 2014, entailing restraint in terms of investments in new projects and maintenance. During 2016, we have adjusted the group to the lower activity level and had to part ways with another 250 skilled employees. The oil and gas business remains an important part of our company, and even though we have made good progress from earlier adjustments and expanded the group’s positions within Offshore Wind and Renewables, the positive effects cannot compensate for the negative impact of the steep decline in our main market. The agreement entered into in March 2017 with Maersk Oil and Gas concerning manpower for North Sea operations shows that we are moving in the right direction, but the group result for 2016 is very unsatisfactory,” said CEO Steen Brødbæk.
Semco Maritime’s strategy towards 2020 focuses on ensuring a higher degree of independency of the oil and gas business by strengthening the business with Semco Maritime’s products and competencies within other market segments – particularly within Offshore Wind and Renewables. To ensure a solid foundation for execution of the strategy, the group’s owner injected new capital in 2016, increasing the group’s equity per 31 December 2016 to DKK 141 million and the equity ratio to 23%.
”The outlook for the oil and gas sector is neither clear nor promising in the short and medium term. On our home market, we are pleased – along with the industry as such – with the Tyra agreement, which may entail orders from 2018. It is positive to our business and the employment situation in the industry as such. Oil and gas will continue to play a significant role in the energy supply. When it comes to schemes for utilisation of marginal fields and exploration of new areas, Norway and the UK are very progressive, which has entailed increasing activity for us in those markets. Similar schemes would be much appreciated in Denmark as well, and we will work to ensure better conditions to the benefit of employment, security of supply and earnings, while we continue the transformation and increase the emphasis on Offshore Wind and Renewables,” said Steen Brødbæk.
The oil and gas markets will be characterised by uncertainty as well as low predictability and investment activity in 2017. The outlook for Offshore Wind and Renewables is more encouraging, and these business areas combined with effects of completed cost savings are expected to contribute positively to the group’s earnings in 2017.