OSLO- Norway's largest oil services company Aker Solutions will cut planned 2020 investments by one third and lay off staff to mitigate the impact of the coronavirus outbreak and the fall in oil demand, the company said on Wednesday.
Aker Solutions expects its revenue to decline by at least 20% this year compared to its outlook at the end of 2019 as activity has fallen across the sector, it added in a statement.
"A large part of the planned project-sanctioning activity in the oil industry will most likely be postponed or cancelled in 2020 unless governments introduce significant fiscal stimulation to aid in the recovery," Chief Executive Luis Araujo said.
The company's shares traded 1.6% lower at 1232 GMT and are down 80% year-to-date.
Aker Solutions said it would reduce investment this year to 500 million Norwegian crowns ($48.5 million), including 200 million crowns already spent, down from an original plan of 750 million.
It also aims to save at least 750 million crowns in operating costs for the whole year.
Measures include freezing wages and reducing staff and, in Norway, it will cancel production of equipment known as subsea trees that control output, while maintaining it in Brazil and Malaysia.
Aker Solutions said it planned to book one-off restructuring costs of about 150 million crowns and impairments of around 500 million crowns in the first quarter as a result of these initiatives.
The company has temporarily laid off 400 employees in Norway and 250 in Britain as of April 1, and said it would consider further reductions.
The Oslo-listed firm, controlled by Norwegian billionaire Kjell Inge Roekke, had about 16,000 employees in 25 countries at the end of 2019.
Another Oslo-listed oil service firm, Subsea 7, said in a separate statement it was cancelling its previous guidance, and warned about its ability to execute existing contracts due to coronavirus containment measures.
Both Aker Solutions and Subsea 7 plan to update investors on their outlook on April 30.
Across the energy industry, companies have been cutting costs as global oil prices have sunk to their lowest levels in 18 years in response to a deep drop in demand and the collapse of a pact by producer nations to limit supply. O/R
Also on Wednesday, oil major BP cut its 2020 spending plans by 25% and said it would reduce output from its U.S. shale oil and gas business. ($1 = 10.2998 Norwegian crowns)
(Editing by Terje Solsvik and Barbara Lewis) ((nerijus.adomaitis@thomsonreuters.com; +47 9027 6699; Reuters Messaging: nerijus.adomaitis.thomsonreuters@reuters.net))
