Subsea 7 SA ((SUBCY)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Subsea 7 SA’s recent earnings call presented a mixed sentiment, highlighting substantial growth in EBITDA and order intake, alongside strong backlog visibility and promising project developments in Norway and Brazil. However, these positives were tempered by flat revenue growth, a decrease in cash reserves, concerns regarding the Saipem merger, and challenges within the offshore wind sector.
Strong EBITDA Growth
Subsea 7 reported a robust Q2 adjusted EBITDA of $360 million, marking a significant 23% growth year-over-year. The company achieved an impressive margin of over 20%, reflecting its operational efficiency and effective cost management strategies.
High Order Intake
The company recorded an order intake of $2.5 billion for the quarter, resulting in a book-to-bill ratio of 1.4x. This strong order intake underscores Subsea 7’s ability to secure new contracts and maintain a healthy pipeline of future projects.
Backlog Visibility
Subsea 7 boasts a combined backlog of $3.6 billion for execution in the remainder of 2025. This provides the company with over 90% visibility on its full-year revenue, ensuring a stable financial outlook.
Norway Projects
The company is actively engaged in significant projects in Norway, including Ormen Lange Phase 3, Yggdrasil, and Northern Lights. These projects highlight Subsea 7’s expertise in maximizing reserves and contributing to the decarbonization of industries.
Brazil Market Expansion
Subsea 7 is experiencing high tendering activity in Brazil, with new projects such as Mero wave 2 and Búzios wave 2 being added. This expansion signals the company’s strategic focus on growing its presence in the Brazilian market.
Flat Revenue Growth
Despite the positive developments, Subsea 7’s group revenue in the second quarter was $1.8 billion, reflecting only a 1% increase compared to the same quarter last year. This flat growth suggests challenges in scaling revenue at the same pace as other financial metrics.
Decrease in Cash and Cash Equivalents
The company’s cash and cash equivalents decreased by $46 million, ending the quarter at $413 million. This decline in cash reserves may impact Subsea 7’s liquidity and financial flexibility.
Potential Challenges in Merger with Saipem
Concerns were raised about potential liabilities associated with Saipem’s legacy backlog and provisioning for projects like Thai Oil. These challenges could pose risks to the successful integration and realization of synergies from the merger.
Offshore Wind Sector Challenges
While the offshore wind sector holds potential in the UK, growth in other markets has been slower than anticipated. This sector’s challenges may affect Subsea 7’s ability to capitalize on renewable energy opportunities.
Forward-Looking Guidance
Subsea 7 reiterated its guidance, emphasizing strong financial performance and future prospects. The company maintained its 2025 revenue guidance between $6.8 billion and $7.2 billion, with an adjusted EBITDA margin expected between 18% and 20%. This outlook reflects confidence in achieving sustained growth and profitability.
In conclusion, Subsea 7’s earnings call presented a balanced view of its current performance and future prospects. While the company demonstrated strong EBITDA growth and order intake, it faces challenges in revenue growth, cash reserves, and the offshore wind sector. The forward-looking guidance remains optimistic, suggesting a stable financial trajectory for the remainder of 2025.