Aker Solutions Earnings and Corporate Presentation
Risk Factors
Investing in bonds involves inherent risks
Prospective investors should consider, among other things, the risk factors set
out and referenced in this risk factors section before making an investment
decision with respect to the bonds. An investment in bonds is suitable only for
investors who understand the risk factors associated with this type of investment
and who can afford a loss of all or part of the investment. If any of the risks
described or referenced below materialise, individually or together with other
circumstances, the business, financial position and operating results of Aker
Solutions could be materially and adversely affected.
Aker Solutions' global footprint, operations and exposure to energy markets
provide both opportunities and risks that may affect the company's operations,
performance, finances, reputation and share price.
Overall company performance is affected by both external and internal factors.
External factors include issues such as fluctuations in energy prices, customer
behaviour and market developments, while internal factors may encompass
matters such as project execution and service delivery. The inherent complexity
of Aker Solutions internal operations and the costs across a broad-based value
chain also impact upon results. Principal cost drivers include the cost of
suppliers' direct and indirect material, sub-contractor costs and the company's
own man-hours, and fluctuations in oil and gas prices.
Through its business, Aker Solutions is exposed to legal, regulatory and political
risks, such as tax changes, decisions on environmental regulation, and
international sanctions that impact supply and demand, as well as risks
associated with unethical and criminal behaviour. The company is also exposed
to financial market risks, including changes in currency rates, interest rates, credit
and counterparty risks, as well as risks associated with access to and terms of
financing.
Market Risk
Compared to recent years, the market situation and current outlook for the oil-
services industry is improving. Nevertheless, significant challenges remain.
Some of the principal factors that contribute to market risk are outlined below:
Local content requirements, legislative restrictions and/or prohibitions on oil
and gas activities in countries of existing or planned operations.
Liabilities under environmental laws or regulations.
Uncertainty regarding future contract awards and their impact on future
earnings and profitability.
Changes in global demand, energy prices and environmental requirements
impact upon oil company activities and the overall development of the
market.
These factors will influence Aker Solutions' exploration, development, production,
investment, modification and maintenance activity.
Developments within the market may lead to capacity adjustments and changes
in the valuation of company assets and liabilities. The main uncertainties include
delivering on the company's international growth ambitions, entry and
establishment in new growth markets, and delivering a competitive cost base.
Aker Solutions is committed to an active policy of risk management and may take
mitigating actions to increase flexibility in its operations, for instance by seeking
to drive down costs, build a sustainable global workforce and enhance
standardization and simplification. The company aims to be agile in its approach
to the market, effectively adapting to industry demand and fluctuations to deliver
optimal value and rewards across the value chain. A focus on continuous
improvement in productivity and sustainability is central to these efforts.
2019 Aker Solutions
May 16, 2019 Slide 46
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