UPDATE 2-Aker Solutions defies oil sector gloom, share surge

Thu Feb 13, 2014 5:26am EST

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By Balazs Koranyi and Henrik Stolen

OSLO, Feb 13 (Reuters) - Norwegian oil services firm Aker Solutions reported surprisingly strong order intake numbers on Thursday and defied oil sector gloom with an upbeat outlook, sending its shares 10 percent higher.

Aker Solutions, part of billionaire Kjell Inge Roekke's business empire, said demand was robust and tendering activity high, despite oil companies reining in capital spending this year in particular, potentially affect parts of its businesses.

Oil companies are trying to save cash for shareholder returns and some of the biggest offshore players such as Statoil , Shell and Chevron are expected to tighten keep back the most cash.

"So far we see robust demand for most products and services," Chief Executive Oeyvind Eriksen said. "Our order intake gives us confidence in the medium term outlook."

"We also see high tender activity in key markets. We're bidding for a number of projects in basically all business segments," he said.

Its shares, some of the worst performers in the European sector recently, jumped as high as 109 crowns in heavy trade and were 9 percent ahead at 106.9 crowns at 1023 GMT. The stock had lost 23 percent over the past 12 months before Thursday's surge, underperforming the sector's 2 percent rise and the broader European markets' 15 percent gain.

The firm said it will pay a dividend of 4.10 crowns a share, above the market's expectation for 3.78 crowns.

"The order intake during the quarter was better than expected at 12.9 billion crowns versus a consensus of 10.7 billion crowns," UBS said.

"Aker Solutions is still positive longer term with exploration and production growth expected at 8-10 percent annually and sees 'fast growth' in subsea spending," it said.

Aker Solutions ditched its long-term growth targets in December, saying it needed to focus on profit over growth as oil firms were reducing capital spending to save cash for bigger dividends.

Analysts have been especially downbeat about the firm since last week when Norway's Statoil, one of its biggest customers, said it would cut capital spending by $5 billion over the next year, sharply reducing maintenance and modification spending, a lucrative business segment for oil services firms.

Eriksen said the firm was seeing some project delays but it has also won major tenders, including one from Statoil for the Johan Sverdrup field and there was still plenty of activity aside from that.

"We're bidding for a number of projects in basically all business segments," he said. "There are still some big fish to be caught like (Shell's) Ormen Lange subsea gas compression."

In the fourth quarter, its earning before interest, taxes, depreciation and amortisation (EBITDA) fell 2 percent to 1.06 billion crowns ($170 million), in line with expectations. ($1 = 6.1157 Norwegian krones) (Editing by Louise Ireland)

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