Subsea 7 reports revenue dips in 2020

In: VesselsWindfarms
29/07/2020

Subsea 7 S.A. issued its second quarter and first half of 2020 results which ended 30 June 2020. The offshore engineering and construction firm recorded $1,505 million in revenue in the first half of 2020, a decreases of around 18% year on year ($1,817 in 2019).

Second quarter revenue of $754 million was 21% lower than the prior year period, which the company noted was broadly in line with the first quarter of 2020, reflecting continued low activity levels in the North Sea, an absence of conventional activity offshore Africa and the Middle East, and the rephasing of some recently awarded contracts due to low oil prices and Covid-19 restrictions.  

In May the company announced measures to reduce its cost base in anticipation of a sharp downturn in oil and gas activity driven by low oil prices. The employee consultation process to reduce the Group’s headcount by around 3,000 (approximately 1,000 employees and 2,000 non-permanent personnel) is underway.


Progress is also being made to reduce its fleet by up to ten vessels. At the end of June, two chartered vessels had been released and two further vessels had been stacked, reducing its active fleet to 28. An additional net reduction of six vessels is currently planned for the coming twelve months, corresponding to the phasing of the projected workload. The company stated it remains on track to meet its target to reduce annualised operating costs by $400 million by the end of the second quarter of 2021.


As a result of implementation of the cost reduction plan, a restructuring charge of $104 million was recorded in the quarter. An update on Covid-19 During the second quarter, the Covid-19 pandemic adversely impacted EBITDA by approximately $30 million.


Its order backlog increased to $7.0 billion by the end of Q2, of which Renewables represents 31%, with $2.1 billion expected to be executed in the remainder of 2020


New orders recorded in backlog during the quarter included
Seagreen, an integrated EPCI project offshore Scotland, Kaskasi, an integrated contract offshore Germany, and Hollandse Kust Zuid, an integrated contract for the first planned subsidy free wind farm project offshore the Netherlands. In total, Subsea 7 is currently executing contracts for projects representing 4.8 GW of offshore wind power, enough to power approximately 5.3 million homes.

Revenue in its renewables unit was $128 million in 1H 2020 compared to $103 million in 1H 2019. The increase in revenue was due to increased activity, particularly in relation to the UK's
Triton Knoll offshore wind farm project, and the Yunlin project in Taiwan. Net operating loss was $38 million in 1H 2020 compared to net operating loss of $19 million in Q2 2019. The year-onyear increase in net operating loss was driven by increased costs on the Triton Knoll project following an incident onboard Seaway Strashnov.

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