Aker Solutions reports delays, increased costs for Longview coal-fired power project

Source: Aker Solutions

Aker Solutions will reverse previously reported profits on its Longview coal-fired power project in the US in the third quarter this year. As a consequence of this, the Process and Construction (P&C) business area will report slightly negative earnings before interests, tax, depreciation and amortisation (EBITDA).

The Longview project was awarded to Aker Construction, Inc., formerly Aker Kvaerner Songer, Inc., an indirect subsidiary of Aker Solutions ASA, in January 2007, in a consortium with Siemens Energy, Inc., formerly Siemens Power Generation, Inc. The consortium contracts total combined value is approximately USD 1.1 billion with Aker Construction's individual contract valued at approximately USD 654 million.

Completion of the project is currently scheduled to occur mid 2011. The project is delayed and costs have increased amongst other due to force majeure events, changes to the project, and third party actions in furnishing engineering services, equipment and materials, all of which have directly and adversely impacted Aker Solutions' project work.

"The situation is highly unfortunate, and we are working closely with our client, partners and vendors to find good solutions. There is uncertainty with regard to remaining work and the financial outcome of the project. In light of this we will reverse profits that have been booked on the project in the past," says Øyvind Eriksen, executive chairman of Aker Solutions.

The development in the Longview project will contribute to an increase in Aker Solutions' working capital in the third quarter.

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