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Aker Solutions beats forecasts despite pricing pressure

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Aker Solutions beats forecasts despite pricing pressure
FILE PHOTO: Aker Solutions flag flutters next to their headquarters in Fornebu, Norway, June 1, 2017. REUTERS/Ints Kalnins/File Photo   -   Copyright  INTS KALNINS(Reuters)
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By Victoria Klesty

OSLO (Reuters) – Aker Solutions <AKSOL.OL> beat second-quarter earnings on Wednesday citing demand from the offshore oil sector despite price pressure from ongoing high capacity.

Service providers are slowly recovering from a 2014 slump in oil prices that prompted companies to curb offshore projects.

Earnings before interest, tax, depreciation and amortisation (EBITDA), excluding one-offs, rose to 629 million crowns (£58.8 million) from 441 million crowns a year earlier.

That beat the 585 million crowns expected by four analysts in a Refinitiv poll.

“There is still a lot of capacity available in some areas, not all,” Chief Executive Luis Araujo told reporters.

“We try not to focus on the pricing, but focus on things we can control, which is the cost base and efficiency,” he said.

Its EBITDA margin, excluding IFRS 16 effects and special items, was 6.4%, and Aker Solution expects the full-year EBITDA margin excluding IFRS 16 effects to be “around current levels.”

That outlook is lower than in April, when Aker Solutions said expected to remain “around the year-to-date level”, which was 6.8% in the first quarter.

Order intake for the April-June period fell to 3.8 billion crowns from 5.7 billion crowns a year earlier.

Revenue rose to 7.5 billion crowns from 6.3 billion, topping the 7.2 billion expected by analysts.

Aker Solutions repeated it expects revenue to rise by around 10% in 2019.

J.P. Morgan Cazenove analysts in a research note said it was “another quarter of strong revenue performance offset by softer underlying EBITDA margins, a negative revision to FY19 margin expectations and order intake which was not as strong as peers in the quarter.”

Aker shares were down 0.2% at 0940 GMT, outperforming an Oslo benchmark index <.OSEBX> down 0.6%.

(Editing by Muralikumar Anantharaman)

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