Norwegian engineering group Aker Kvaerner posted a higher-than-expected 66 per cent jump in second-quarter core profit and reaffirmed its profitability target.

Soaring energy prices have spurred petroleum activity and lifted the oilfield services industry, including suppliers of engineering and construction like Aker Kvaerner, whose value has grown 45 per cent so far this year to $5.3 billion.
Earnings before interest, tax, depreciation and amortisation (EBITDA) rose to 733 million crowns ($116.2 million), beating an average of 709 million in a Reuters survey of seven analysts, whose forecasts ranged from 662 million to 757 million crowns.
“Rising energy consumption and field depletion leads to sustainable high demand for our services,” chief executive Martinus Brandal said.
“We see new business opportunities in the Arctic and deep-water (projects) ... and have a growing interest in LNG,” added Brandal, who took over as chief executive from Inge Hansen in July.
Aker Kvaerner reaffirmed its EBITDA margin target of 6.5 to 7.0 per cent by the end of 2007 after its profitability ratio rose to 5.2 per cent in the second quarter from 4.5 per cent in the same period a year earlier.
“The results look all right but I am not jumping with joy,” said Anders Rosenlund, analyst at ABG Sundal Collier, who has a “hold” rating on the stock. “EBITDA is strong in absolute terms but the margin is not developing as aggressively.”
Analysts said they would like to see sequential margin improvement as the company continues to globalise operations from its Norwegian continental shelf hub.
Brandal said higher margin projects - such as sub-sea and project technology - filled Aker Kvaerner’s order portfolio but accounted for a smaller portion of present revenues.
The company’s order intake amounted to 15.2 billion crowns in the second quarter, and its backlog stood at 56 billion on June 30, almost unchanged from a quarter earlier. He said another seven billion crowns of orders had been won in July.
“The order backlog and the prospects ahead make us comfortable with the (margin) target,” Brandal told journalists.
Aker Kvaerner has operations from south-east Asia to the Gulf of Mexico and seeks to strengthen its presence in Russia and the Caspian Sea, looking to win both engineering and fabrication projects, potentially with the help of foreign partners.
Its revenues grew 44 per cent year-on-year in the second quarter to 14 billion crowns, exceeding all analyst forecasts of 11.4 billion to 12.2 billion crowns in the Reuters poll.
Over half of revenues and EBITDA came from its field development segment, which boomed due to the two biggest gas projects off Norway - Snoehvit and Ormen Lange.
According to Reuters data, Aker Kvaerner trades at a 2007 price-to-earnings ratio of 14.9, ahead of Norwegian peer Acergy , at 13.9, but slightly below France’s Technip , at 16.1, and US Schlumberger at 18.
 Aker Kvaerner has agreed with Sinopec to boost cooperation and jointly bid for projects, the company said.
The agreement will allow greater cooperation in identifying, marketing, bidding and executing projects, Aker Kvaerner ASA said.
“Aker Kvaerner and Sinopec will selectively target opportunities internationally, with particular focus on expanding the relationship in the Kingdom of Saudi Arabia and other markets in the Middle East,” it said.
Wim van der Zande, President of AK Process, Aker Kvaerner’s European process business, added, “We also see the potential for further cooperation on selected projects in China.”
Aker Kvaerner is already working with Sinopec on a polyolefins project in Saudi Arabia for Saudi industrial giant Sabic. The two companies are also involved in several other petrochemical industry projects, Aker Kvaerner said.
Norway’s Statoil has extended platform maintenance and modification jobs worth 2.8 billion crowns ($444 million) to Aker Kvaerner and its half-owned Aker Reinertsen.
The 2.0-billion-crown job for Aker Kvaerner Offshore Partner AS and 800-million-crown contract for Aker Reinertsen AS came when Statoil chose to exercise an extension to a contract originally awarded in 2002, Statoil and Aker Kvaerner said.