Subsea 7 Slips Deep into Red, Plans Vessel Sales

UK-based offshore contractor Subsea 7 sank to a $922mn net loss in the second quarter, from a $24mn profit a year earlier, it said on July 29, on various factors mostly relating to the Covid-19 pandemic.

The company's adjusted pre-tax earnings (Ebitda) swung to a loss of $9mn, versus a $59mn profit a year earlier, on the back of a $104mn restructuring charges, Covid-19's impact on markets and low vessel utilisation in certain areas. It also booked $229mn in impairment charges on property, plant and equipment assets, along with $578mn in goodwill charges.

Subsea 7 is targeting $400mn in annualised cost savings by the second quarter of 2021, and it also wants to divest 10 vessels to help weather the downturn. Its current active fleet is 28 in size.

On the upside, Subsea 7 said it had scored $1.7bn in orders at renewable energy projects, with its overall backlog exceeding $7bn at the end of June, versus $5.65bn three months earlier. Cash and cash equivalents also grew to $483mn from $340mn three months earlier, while its net debt shrank to $30mn from $255mn.

The new renewables orders, strong cash generation and cost-cutting measures have helped improved Subsea 7's "resilience to the current downturn in oil and gas while enabling us to capture opportunities in the offshore wind market and extend our ten-year track record in renewable energy," CEO John Evans said.