Aker Solutions Plunges on Additional Costs for Brazil Delays

13 October 2011

Aker Solutions ASA, Norway’s biggest oil platform maker, fell the most in two months in Oslo trading after announcing additional costs from delays to deliveries of subsea systems to Petroleo Brasileiro SA in Brazil.

The company will book extra costs of 400 million kroner ($70 million) to 500 million kroner in the third quarter, the Oslo-based company said today in a statement.

The shares fell as much as 10.2 percent, the most since Aug. 12, and were down 9 percent at 54.2 kroner as of 5:08 p.m. local time.

The company said delivery schedules for all major subsea production systems on order from Petrobras are "substantially” delayed in part because of "prolonged execution time” and measures to improve quality. The company’s second-quarter profit dropped 70 percent partly due to delays in Brazil.

"Our performance is hampered by high activity in Brazil,” Oeyvind Eriksen, executive chairman of Aker Solutions, said in the statement. "Suppliers to the oil industry in the region are facing lack of resources. But parts of the reason for our delays are also very specific to Aker Solutions and our manufacturing site in Curitiba.”

A review will be done during October to verify the cost estimates and to ensure all risks and opportunities for improvement have been "fully quantified,” Aker Solutions said. The company will give a further update on Nov. 3, when it presents its third quarter results.