Information on the Target

Aker Solutions has reported a successful third quarter, showcasing increased revenues, margins, and cash generation compared to the same period last year. The company announced the final closure of the OneSubsea joint venture in early October, which positions it to receive USD 700 million, while maintaining a 20 percent ownership stake in this enhanced subsea entity.

For the third quarter of 2023, Aker Solutions achieved a revenue of NOK 14.3 billion, along with an EBITDA of NOK 1.5 billion and an EBITDA margin of 10.6 percent. Additionally, it has secured a robust order backlog of NOK 90 billion, demonstrating the positive momentum and strategic direction of the company in the energy sector.

Industry Overview

The energy sector in Norway is currently exhibiting resilience despite facing challenges such as cost inflation, geopolitical uncertainties, and supply chain issues. Aker Solutions’ strategic positioning within both the traditional oil and gas markets and the burgeoning renewables sector enables it to adapt to changing energy demands.

Norwegian energy markets are characterized by high levels of activity, particularly in segments outside of Subsea, accounting for 65 percent of the total tender activity which stood at approximately NOK 103 billion. This diverse portfolio allows Aker Solutions to leverage its capabilities across the entire energy spectrum, addressing supply constraints and supporting investments in reliable energy sources.

Despite the high ambitions within the renewable sector, challenges remain. The industry's current state reflects immaturity, and profit levels have yet to meet expectations necessary for further investments. Government initiatives and policies are crucial in establishing frameworks that enhance predictability and foster the industrialization of renewable projects.

As the market landscape evolves, Aker Solutions is poised to capture opportunities linked to emissions reduction and energy security. With a strong secured order backlog, the company is anticipating revenue growth in various segments as it navigates potential structural changes within the energy sector.

The Rationale Behind the Deal

The closing of the subsea joint venture transaction represents a significant milestone in Aker Solutions' strategic roadmap. Transitioning from an independent subsea business to a co-owner within a leading global subsea company demonstrates the company’s commitment to growth and the maximization of shareholder value.

This deal aligns with Aker Solutions' objectives to enhance operational performance and to capitalize on the increasing demand for energy solutions. The infusion of USD 700 million from this transaction will further strengthen its financial positioning and flexibility, allowing for strategic investments and continued focus on high-value projects.

Information about the Investor

Aker Solutions is an established player in the energy industry with a strong track record of performance. The company has consistently met financial targets and demonstrates a proactive approach to market dynamics. Under the leadership of CEO Kjetel Digre, Aker Solutions aims to leverage its expertise to navigate both conventional and renewable energy markets successfully.

With a robust financial outlook, as evidenced by a net cash position of NOK 7.4 billion at the end of the third quarter, Aker Solutions is well-equipped to sustain growth and innovation within its sector. The company's management expresses confidence that market activity will continue to rise across the energy landscape, driving the need for additional investments and operational enhancements.

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From an investment perspective, the closure of the joint venture with OneSubsea presents a promising opportunity for Aker Solutions. By diversifying its operations and enhancing its strengths in subsea capabilities, the company aims to improve its market positioning significantly. This strategic alignment is expected to yield long-term benefits as the energy sector evolves.

The revenue growth projections for 2023 of around NOK 34 billion, along with an expected growth rate of 10 percent in 2024 for segments outside Subsea, indicate a strong outlook for Aker Solutions. The anticipated EBITDA margin of between 6 to 7 percent further demonstrates the potential for profitability amid challenging market conditions.

However, it is crucial to monitor the external economic factors influencing the broader energy market. Aker Solutions' selective approach to participating in the renewable sector also indicates prudent risk management, ensuring the company's investments align with achievable returns.

In conclusion, Aker Solutions’ strategic moves, financial health, and proactive management outlook position it as a compelling investment opportunity within the evolving energy landscape.

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