UK-headquartered TechnipFMC is looking to a strong 2021 and 2022 for its subsea and surface technologies businesses after dipping into the red in the fourth quarter.
The subsea-focused company also sees opportunities in a decarbonising world, predicting that offshore wind, wave and green hydrogen are "the next frontier for the energy transition".
In the offshore renewables sector, TechnipFMC aims to build on its Deep Purple initiative through which it addresses technical challenges with clients and partners.
"Our common goal is to integrate offshore renewable electricity and subsea hydrogen storage to provide power to subsea infrastructure," chief executive Doug Pferdehirt told analysts in the company's quarterly results call.
The Deep Purple concept aims to bring together offshore wind and offshore hydrogen technologies to produce, store and transport energy in the form of pressurised green hydrogen.
Pferdehirt also highlighted TechnipFMC's partnership with Danish player Floating Power Plant on a proposed offshore green hydrogen pilot project (based on wind and wave energy feedstock) for the Canary Islands, plus its partnership with Energias de Portugal on the Behyond project offshore Portugal that also aims to use wind power to generate green hydrogen.
Commenting on its traditional upstream business last week, TechnipFMC's chief executive said: “We remain very confident that inbound orders for 2021 will exceed the $4 billion achieved in 2020,” with potential for more to come in 2022.
Pferdehirt told analysts during the company’s quarterly results call: “We experienced strong momentum in front-end activity in the second half of last year, and we expect this to continue throughout 2021, creating an environment for a more sustainable deep-water recovery.”
These early engineering and design studies “should support... our expectation for continued order growth in 2022", he added, based on renewed operator confidence in the macro-economic outlook, lower market volatility and higher oil prices.
For this year, TechnipFMC expects Brazil to be the most active subsea region for new project orders, with growth also coming from the North Sea, Asia Pacific and Africa.
Subsea revenue for the final quarter of 2020 was $1.3 billion, a decrease of 10% from the prior year primarily driven by lower project activity in Norway and Brazil, partially offset by increased activity in the US, Africa and Asia Pacific.
In the company’s surface technologies business, Pferdehirt said that, for 2021, “we expect a gradual and steady recovery in well count to drive modest international market growth with spending increases led by national oil companies, particularly in the Middle East”.
For North America, TechnipFMC expects full-year revenue will be “flat or down modestly” on 2020.
The surface technologies business suffered a 36% drop in revenues in the fourth quarter to $262.3 million, mainly driven by a sharp reduction in activity in North America.
TechnipFMC posted a net loss of $39.3 million in the fourth quarter, compared to a loss of $2.4 billion in the same period the previous year.
Revenues for the quarter, meanwhile, fell to $3.4 billion versus $3.7 billion in the same quarter of 2019.
These figures include profits and revenues of Technip Energies, which was split off from TechnipFMC last month.
For the full year, TechnipFMC posted a loss of nearly $3.3 billion on revenues of $13.1 billion, against a loss of $2.4 billion on revenues of $13.4 billion in 2019.
Commenting on the company's results, Barclays analyst David Anderson said that, after stripping out the results of Technip Energies, TechnipFMC's fourth-quarter revenue and earnings before interest, tax, depreciation and amortisation "were both above our estimates by 4% and 10%, respectively".
The note said quarterly subsea orders were light at $712 million, but surface orders of $300 million rebounded from the third quarter.
"Perhaps more important than the fourth-quarter results was the 2021 guidance, which was far better than our expectations," added Anderson, in terms of subsea revenues and Ebitda margins for subsea and surface technologies.
In total, he noted, this guidance implies a 2021 Ebitda of $545 million.
Cowen analyst Marc Bianchi wrote that the subsea margin improvement "is aided by cost reductions and executing on higher margin backlog, which we view as an important inflection after a period of deflationary backlog and concerns around pricing of orders in 2019 and 2020".
As for the surface business, he saw upside, noting: "We think margin guidance could prove conservative."