A Progressive Digital Media business

COMPANY PROFILE

Aker Solutions ASA

REFERENCE CODE: 4939FDE4-B8D7-42A2-AA3F-3992C63B080C

PUBLICATION DATE: 28 Oct 2021
www.marketline.com
COPYRIGHT MARKETLINE. THIS CONTENT IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED OR DISTRIBUTED
Aker Solutions ASA
TABLE OF CONTENTS

TABLE OF CONTENTS

Company Overview ........................................................................................................3

Key Facts ......................................................................................................................... 3
SWOT Analysis ...............................................................................................................4

Aker Solutions ASA Page 2

© MarketLine
Aker Solutions ASA
Company Overview

Company Overview

COMPANY OVERVIEW
Aker Solutions ASA (Aker or ‘the company’) is a Norway-based company engaged in the provision of
engineering, design and technology products, and integrated services worldwide, mainly for the oil and
gas industry. The company offers subsea engineering and procurement, equipment, and systems. It also
offers production asset services and subsea lifecycle services. The company operates in the Europe,
North America, South America, Africa, Asia Pacific, and the Middle East. It is headquartered in Lysaker,
Norway.

The company reported revenues of (Norwegian Krone) NOK29,396 million for the fiscal year ended
December 2020 (FY2020), an increase of 0.5% over FY2019. The operating loss of the company was
NOK776 million in FY2020, compared to an operating profit of NOK705 million in FY2019. The net loss of
the company was NOK1,540 million in FY2020, compared to a net profit of NOK42 million in FY2019.
The company reported revenues of NOK7,314 million for the third quarter ended September 2021, a
decrease of 45.8% over the previous quarter.
Key Facts

KEY FACTS

Head Office Aker Solutions ASA

Oksenoyveien 8
Lysaker
Lysaker
NOR
Phone 47 67 513000
Fax 47 67 826950
Web Address www.akersolutions.com
Revenue / turnover (NOK Mn) 29,396.0
Revenue (USD Mn) 3,123.6
Financial Year End December
Employees 14,800
Oslo Stock Exchange Ticker AKSO

Aker Solutions ASA Page 3

© MarketLine
Aker Solutions ASA
SWOT Analysis

SWOT Analysis

SWOT ANALYSIS
Aker Solutions ASA (Aker or ’the company’) is a Norway-based company engaged in the provision of
engineering, design and technology products. Strong order book value, focus on research and
development and diversified product portfolio are company's major strengths whereas, dependence on
Norway remains a cause for concern. Increasing demand for oil and petroleum products and new
contracts are likely to provide growth opportunities for the company. However, intense competition,
environmental regulations and foreign exchange risks could affect its business operations.

Strength Weakness

Strong order book value Dependence on Norway

Strong focus on research and development (R&D)
Diversified product portfolio
Opportunity Threat

New contracts strengthen its Market Position Intense competition adversely effects the market share
Increasing demand for oil and petroleum products Foreign exchange rate risks
Environmental regulations impact the Business
Operations

Strength

Strong order book value

A strong order backlog ensures future revenues for the company. As of FY2019, Aker recorded order
backlogs worth NOK35,308 million as against NOK35,148 million in FY2018, showing an increase of
0.5% YoY.

Strong focus on research and development (R&D)

The company has increased its focus on innovation in FY2019 to ensure future competitiveness. The
company focuses on developing new cost-efficient concepts, products and technologies that challenges
the offshore petroleum industry. The R&D portfolio investments in FY2019 involved in more than six key
projects. Total R&D expenditure was NOK309 million, of which NOK228 million was capitalized and
NOK81 million was expensed. Through PUSH program, the company develops software and associated
offerings for industry works from concept through field development, operations, and decommissioning.
Aker directed its R&D investments towards three major pillars of growth, including subsea production
products, new generation controls, sensors and automation systems: software solutions for supporting
analytics and data acquisition. Strong focus on R&D is helping the company in improving its products and
services, and thereby helping in having competitive edge over its peers.

Aker Solutions ASA Page 4

© MarketLine
Aker Solutions ASA
SWOT Analysis

Diversified product portfolio

Aker has a diversified product portfolio. The company offers its products under subsea and field design
category. The subsea offers both single subsea equipment and complete subsea systems. The hardware
deliveries are organized as projects and include engineering, procurement, and construction (EPC) and
often also installation and commissioning. The subsea systems include hardware such as subsea trees,
control systems, work over systems, tie-in and connection systems, manifolds, umbilicals, power cables
and compression systems. Under field design category, the company provides engineering services and
maintenance and modification services for oil and gas fields. The engineering services include concept
studies, front-end engineering, and design (FEED), field planning, detailed engineering, procurement
services and construction management services. The maintenance and modifications services include
maintenance, modifications, asset integrity management (AIM) and hook-up services. Aker's diverse
range of products and businesses have helped it develop a varied customer base, insulating it from
downturns in any end user market and providing cross selling opportunities to the company.

Weakness

Dependence on Norway

An overdependence on Norway for a large proportion of its revenues could be a cause for concern for
Aker in the event of any political or economic adversity. Aker has presence across 20 countries in
Europe, North America, South America, Africa, Asia Pacific, and the Middle East, but derives 59.3% of its
total revenue from Norway. Any adverse political, economic, or climatic developments in the region could
adversely impact the company’s operations.

Opportunity

New contracts strengthen its Market Position

Aker received various contracts and projects which will expand its existing operations and strengthen
market position. In December 2020, Aker Solutions secured a contract from Equinor for hook-up of the
fifth platform on the Johan Sverdrup field. In the same month, Aker Solutions and Equinor entered into a
letter of intent to deliver a subsea production system to the Kristin Sør oil and gas satellite fields in the
North Sea. In November 2020, Aker secured contract from Equinor to provide maintenance and
modifications services at the Peregrino field, offshore Brazil. In October 2020, Aker was awarded a front-
end engineering and design (FEED) contract from ConocoPhillips to deliver the subsea production
system for the Tommeliten Alpha development offshore Norway. In the same month, Aker Solutions
secured a contract from Equinor for the delivery of a subsea production system for the Breidablikk
development in the North Sea. In September 2020, Aker Solutions secured a three-year contract
extension for work at North Sea fields operated by ConocoPhillips.

Increasing demand for oil and petroleum products

The company could strengthen its business with the expected increase in demand for oil and petroleum

Aker Solutions ASA Page 5

© MarketLine
Aker Solutions ASA
SWOT Analysis

products across the world. According to World Oil Outlook (WOO) 2019, the long-term demand for oil is
expected to increase from 98.7 million barrels per day (MMbbl/d) in 2018 to 110.6 MMbbl/d by 2040. Non-
OECD countries will continue to lead this growth, which would increase from 50.9 MMbbl/d in 2018 to
72.3 MMbbl/d by 2040. The demand in non-OECD region will increase due to the growing middle class,
high population growth rate and the potential for substantial economic growth. India is expected to be the
largest contributor to this incremental demand, which will add around 5.4 MMbbl/d between 2018 and
2040. The increase in demand for oil in Eurasia is estimated to be 0.8 MMbbl/d to reach 6.3 MMbbl/d in
2040. The demand for oil in China is likely to reach 17.1 MMbbl/d by 2040, indicating an increase of 4.4
MMbbl/d compared to that in 2018. The demand for light products such as ethane/LPG, naphtha and
gasoline is expected to increase to 50.7 MMbbl/d by 2040. The demand for middle distillates
(jet/kerosene, gasoline and diesel) is expected to increase to 40.5 MMbbl/d and the demand for heavy
products (residual fuel and other products) is expected to increase to 19.3 MMbbl/d over the forecast
period.

Threat

Intense competition adversely effects the market share

Aker is engaged in highly competitive businesses, in which customer contracts are often awarded through
bidding processes. These bidding processes are based on price and the acceptance of certain risks. The
company competes with other general and specialty contractors, both international and domestic. Some
competitors have greater financial resources than the company. Since financial strength is a major factor
in deciding the granting of a contract, the company may lose contracts to larger players. Hence, intense
competition could negatively impact the company's operations and its financial condition.

Foreign exchange rate risks

Aker's products are sold in several locations around the world. Besides Norway, the company generates
revenues from other European countries, and in Asian and North American currencies. Changing foreign
currency exchange rates could have a material impact on the company's earnings and cash flows.
Foreign currency exchange rate fluctuations could affect Aker's consolidated financial statements when
the financial statements of the overseas operations presented in local currencies are translated into
Norwegian Krone.

Environmental regulations impact the Business Operations

Aker's activities in the oil and gas sector present industrial and environmental risks and are therefore
subject to extensive government regulations concerning environmental protection and industrial security
in most countries. For example, in Europe, the company needs to meet the criteria of the European Union
Seveso II directive for classification as high-risk sites. The broad scope of the company's activities
involves a wide range of operational risks such as those of explosion, fire or leakage of toxic products,
and production of non-biodegradable waste. All these events could possibly damage or even destroy
wells as well as related equipment and other property, cause injury, or even death to persons or cause
environmental damage. In addition, since exploration and production activities may take place on sites
that are ecologically sensitive (tropical forest and marine environment, among others), each site requires

Aker Solutions ASA Page 6

© MarketLine
Aker Solutions ASA
SWOT Analysis

a specific approach to minimize the impact on the related ecosystem, biodiversity, and human health. All
these factors present substantial risk to the company's operations.

Aker Solutions ASA Page 7

© MarketLine
Copyright of Aker Solutions ASA SWOT Analysis is the property of MarketLine, a
Progressive Digital Media business and its content may not be copied or emailed to multiple
sites or posted to a listserv without the copyright holder's express written permission.
However, users may print, download, or email articles for individual use.