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ECONOMIC REPORT
2016
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EBITDA across the segment is also expected to fall from a high of almost £1.4 billion in 2014 to just under
£1 billion this year, although the impact of cost and efficiency improvements means the margins are likely to
remain fairly consistent.
It would appear that the delayed impact of the downturn has given these
companies time to consider fleet management and secure revenues from
adjacent markets, such as offshore wind. Contracting models are also
being modified with noted success coming from shorter term contracts
and performance-led remuneration, highlighting the savings available to
operators through more efficient solutions rather than simply cutting the
headline cost.
Moreover, companies in this area are collaborating with their customers
and one another to improve their competitiveness through more targeted
product and service offerings.
Several companies (including Fletcher Shipping, Harkand and Atlantic
Offshore) have, however, gone into administration and removed supply from
the market, creating an opportunity to increase market share for surviving
incumbents.
Overall, despite significant falls in revenue over last year and into this year,
the rate of decline has been slower compared to some other segments of
the supply chain.
Looking ahead to 2017, the combination of falling forecasts in subsea
expenditure (shown by Figure 41) and a continued oversupply of vessels means that analysts expect revenue to
fall further. Any stabilisation or recovery is heavily linked to a return to subsea development spend, which, in turn,
is likely to lag behind any initial growth in exploration and drilling.
Companies in
the marine and
subsea sector
are becoming
increasingly
exposed to the fall
in the number of
new development
projects.