TechnipFMC takes £1.3billion hit from subsea business

TechnipFMC
TechnipFMC

TechnipFMC fell to a steep loss to end 2018 as it took charges relating to its subsea business, restructuring costs and historical investigations into the company.

The firm posted a pre-tax loss £1.07billion in its full-year accounts, down from a £521m profit in 2017.

That is despite TechnipFMC pointing to its order backlog increasing 40% year-on-year to a value of £10.9bn.

Revenue was £9.5bn for the year, down nearly 17% on 2017.

TechnipFMC reported a £1.3billion impairment charge for its subsea business in the fourth quarter, which the firm said was partly related to down-valuing assets.

It said: “These non-cash charges resulted from our annual fair value assessment of our business and assets; these include impairments to goodwill and fixed assets, including a reduction in the carrying values of certain vessels within our fleet.”

A £214.8million charge was also recorded as an estimate for the overall settlement of investigations into historical projects the company was involved in.

The firm said it is cooperating with U.S, Brazilian and French authorities in their investigations into potential violations of anticorruption laws in Brazil, Equatorial Guinea and Ghana as well as Unaoil contracts.

It stated: “These matters involve negotiations with law enforcement authorities in three separate jurisdictions, and there is no certainty that a global settlement will be reached or that settlement will not exceed the provision.”

Also among the expenses was restructuring costs totalling £72.7million.

Despite the impairments, chief executive Doug Pferdehirt was positive about the company’s achievements for the year.

He said: “Total Company orders were $14.3 billion for the full year, a 40 percent increase compared to the prior year.

“Orders exceeded revenues in all segments, with Onshore/Offshore securing several key awards in the downstream and petrochemical sectors, driving a 95 percent increase in orders year-over-year.

“In Surface Technologies, strength outside the Americas drove orders 36 percent higher than the previous year.

“During the quarter, we progressed on outstanding investigations of historical projects and took a $280 million provision as a probable estimate for the aggregate settlement. We continue to cooperate with all authorities in order to conclude this matter.

“Through the hard work and dedication of the more than 37,000 women and men of TechnipFMC, we have done more than simply navigate the industry downturn.

“We have successfully pioneered a completely new integrated subsea model and restored growth in total Company backlog, positioning us well for further success in 2019 and beyond.”

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