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What Were TechnipFMC’s Earnings Drivers in 1Q18?



Segment-wise performance

TechnipFMC (FTI) released its 1Q18 financial results on May 9. From 1Q17 to 1Q18, the Subsea segment’s revenue decreased 14%, while the Onshore/Offshore segment decreased 10.8% fall. The Surface Technologies segment’s revenue rose 49% during the same period.

The Onshore/Offshore and the Surface Technologies segments saw remarkable operating income growth. The Onshore/Offshore segment’s operating income increased 42% in 1Q18 compared to 1Q17. The Surface Technologies segment’s operating income was $30.6 million compared to an operating loss of $18.6 million last year. TechnipFMC accounts for 5.6% of the iShares US Oil Equipment & Services ETF (IEZ). IEZ tracks an index composed of US equities in the oil equipment and services sector. IEZ increased 1% in the past year, while FTI increased 4.7% during this period.

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Positive earnings drivers in 1Q18

  • higher project activity in Europe, the Middle East, India, Africa, and the Asia-Pacific regions
  • benefits of merger synergy following the merger of Technip S.A. and FMC Technologies—read Technip-FMC Technologies Merger: Reaching the Finale
  • increased demand for hydraulic fracturing, wellhead, and flow metering equipment
  • improved pricing for TechnipFMC’s offerings in North America

Negative earnings drivers in 1Q18                         

  • prior-period declines in inbound orders related to the market downturn affected 1Q18 revenues negatively
  • lower vessel utilization in the Subsea segment
  • lower-priced backlog and project award deferrals in international markets
  • higher costs associated with the reactivation of hydraulic fracturing assets

Next, we’ll discuss TechnipFMC’s returns.


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