Welcome to Aker Solutions presentation of Q4 and full year results for 2016. My name is Bunny Nooryani, and I'm the Chief Communications Officer. With me here today are Luis Araujo, our CEO, and Svein Stoknes, our CFO. They will go through the key developments. After that, we'll have time for Q&A. We will also be able to have one-on-one brief interviews with the media here. Before we get started, I'd like to point to the nearest emergency exit, which is to your left through the glass door. Please do note that we don't have any fire drills planned today. Luis.
Thanks, Bunny. Good morning, and thank you for joining us here today. I'm pleased to be here today with Svein to go through our results of the Q4 , to sum up the year, and provide our view of where we're going from here. Let's start with the main developments. We are now two years into this unprecedented market slowdown, and conditions remain challenging. We are also seeing some signs which are positive as cost cuts are having an effect, and the market sees oil prices stabilizing at a higher level this year. Against this backdrop, we delivered yet another period of strong execution in the Q4 , and our major projects progressed as planned globally.
We took further steps in streamlining and strengthening our operations by introducing a new organizational structure. This setup replaces our business areas with five delivery centers that reflect our business workflow, enabling us to become even more effective. We also took a major step forward in growing our services business internationally by acquiring a 70% of the Brazilian construction and assembly company, CSE Mechanical and Instrumentation . Don't have to repeat that. I'm pleased to say that the process of integrating our two companies is going smoothly. Our company push to improve operations and bringing down costs continued with undiminished vigor. The program is now two-thirds complete and is ahead of schedule. These improvement efforts supported our underlying margins, which were steady in the Q4 compared with a year ago. We achieved even as the industry slowdown caused weakening of our top and bottom lines.
To sum up, we enter the new year with a strong operational performance, efficiency improvements, order backlog, and international growth, and that will stand us well as we face continued market uncertainty. Now to the main numbers. The full-year financial figures show revenue of NOK 25.6 billion in 2016, EBITDA of NOK 687 million, an EBITDA margin of 2.7%. Excluding special items, the margin was 5.2%, and earnings per share were NOK 2.2. The order intake was NOK 17 billion, bringing the backlog to NOK 31 billion. We also had a solid financial position at the end of the year with a liquidity buffer of NOK 7.5 billion, and this gives us a good flexibility ahead.
Even though we have a solid financial position, the board deems prudent to exercise caution and boost our balance sheet in these challenging times. The board has proposed 0 dividend for 2016. We still maintain our policy of paying a dividend of between 30% and 50% of the net profit over time. In the Q4 , revenue was NOK 6.1 billion. We had a loss before interest and taxes of NOK 232 million. The EBITDA margin was -3.8%, but excluding special items, the margin was 5.6%, and EPS was NOK 3.62. Compared with a year earlier, revenue was down 22% as the global oil services market slowed. We maintained steady underlying margins year-on-year, helped by our company-wide improvement efforts.
The order intake was NOK 4.1 billion in the quarter. This brought the backlog to NOK 31 billion compared with NOK 40 billion the year before. About 60% of our backlog was for projects outside Norway. New orders in the quarter included two contracts worth at least NOK 900 million from BA to deliver the subsea production system, maintenance and services at Norway's Vale development. We also secured a contract worth NOK 350 million from Statoil to build pipeline facilities, modifications, and tie-ins for the Mongstad terminal. We also won a contract of about NOK 1 billion for work in the subsea area, and this is from a customer whose name we are not yet in a position to disclose.
Importantly, last but not least, we secured two framework agreements from BP to provide concept and front-end engineering services globally. This follow three subsea-related framework contracts that we signed earlier in the year with BP, which also are global in scope. We are very pleased to now have framework agreements in all parts of our business with this major customer, and we look forward to building on the strong collaboration that we have developed over many years already. Also of great significance, we continue to see solid interest in our early-phase capabilities in the quarter. We won 24 study awards for projects in Norway, Europe, the U.S., West Africa, and Asia Pacific. This brings the total number of studies won last year to more than 80, which is a new record for us.
This is very encouraging, since several of these are of strategic importance and put us in a strong position to secure future work. Again, last but not least, as announced last week, we, after the quarter's end, secured a hookup order from Statoil for the riser platform of the major Johan Sverdrup development. We will work with our subcontractor, Kvaerner, to join together the platform seven modules. The total contract value is about 900 million NOK. The contract also contains hookup options for the field's processing and living quarter platforms. As mentioned at the start of this presentation, we have made excellent progress with our company-wide improvement program, The Journey. The program targets an improvement in cost efficiency of at least 30% or 9 billion NOK in annualized cost savings by the end of 2017.
That compares with our 2015 cost and work volumes. We are making this improvement by simplifying our methods, our organization set up, and our geographic footprint. We are also standardizing our products and services. Let me give you some color on this. We have improved efficiency at maintenance and modification projects globally by as much as 40%, and this can be seen in reduced man-hours and shorter lead times. We also brought down the engineering and procurement services cost per ton by as much as 30% at key projects. Our subsea equipment plant in Tranby, it's outside Oslo, set delivery records last year after reducing lead times by as much as 50%. These are just some of many more examples of how we are boosting cost efficiency and helping to lower cost for our clients. Yeah.
Now let's look ahead. While the outlook for oil services remains challenging, there are some signs of a recovery. The oil price at sea is stabilizing at higher levels this year, and improvement measures across the industry are having an effect. The given costs are coming down and this increases the likelihood of more projects being sanctioned this year. This is particularly the case for brownfield projects, as oil companies focus on optimizing output from existing fields rather than greenfield developments. There is healthy tendering activity in our main markets, and we are currently bidding for contracts totaling about 50 billion NOK. About two-thirds of this is in subsea and the rest in field design. Since the start of the market slowdown in 2014, not that long ago, we have reduced our permanent workforce by about 30%.
In January, we announced additional workforce reductions that will affect about 650 positions, mainly in Norway, U.K., and India. This is due to the continued market slowdown, also our company-wide reorganization. Going forward, we will continue to be vigilant about our workforce globally. Well, long term, we remain upbeat. Global energy demand is seen increasing, This supports a positive long term outlook for sure deep water oil and gas, where we are well-positioned. At the same time, few developments are becoming more complex, We have the technology and capabilities needed to manage these challenges. Well, to sum up, we are delivering consistently strong execution and steady margins, even as we face continued market headwinds. Our global improvement efforts on the backlog and solid finances will continue to benefit us going forward.
Well, thank you for listening, and Svein, we will now take you through the numbers in more details.
Thank you, Luis, and good morning. I'll now take you through the key financial highlights of the Q4 and 2016, our divisional performance, and run through our financial guidance before we move on to the Q&A. As always, all numbers mentioned are in the Norwegian krone, and as usual, let's start with the income statement. Overall operating revenues for the Q4 were down 22% year-on-year. The market slowdown continued for our North Sea exposed activities and within subsea services. This was partly offset by good progress on a number of key projects. Our reported Q4 EBITDA was NOK 380 million. This included some special items, including restructuring costs and provisions totaling NOK 130 million. These were mainly related to our company-wide reorganization, but also due to the recently announced capacity adjustments.
We also booked a provision of NOK 39 million for onerous leases related to idle office capacity, NOK 9 million in costs mainly related to transaction fees following acquisitions in Brazil and in India, and a gain of NOK 18 million related to non-qualifying hedges. Excluding special items, the EBITDA was NOK 539 million, compared with NOK 695 million a year earlier. This was equal to a margin of 8.8% in the Q4 , which was little change from 8.9% in the year earlier period. We achieved this steady margin development despite a 22% drop in revenue year-on-year, and because of our continued strong execution and internal improvement efforts.
We saw the same development for our full year numbers, where volumes declined 20% to NOK 25.6 billion, but we delivered an underlying EBITDA of NOK 2.1 billion with a margin of 8.3%, the same as in 2015. Our Q4 depreciation was impacted by non-cash related impairments and write-downs of technology and fixed assets of NOK 414 million, while the underlying depreciation was slightly down from last year at NOK 197 million. We ended the year with underlying depreciation of NOK 778 million, slightly below our guidance for NOK 850 million-NOK 900 million. Going forward, we continue to expect our underlying depreciation in the range of NOK 800 million-NOK 900 million for 2017. Our reported Q4 EBITDA or operating profit was down year-on-year to a loss of NOK 232 million.
Excluding all special items, EBITDA was NOK 342 million, and the margin was 5.6% versus 6.1% last year, reflecting a slightly higher relative depreciation burden. The restructuring and related one-off costs slightly exceeded what we indicated in our Q3 . Yet, with these non-cash balance sheet adjustments and provisions established, we should be well-positioned once the market recovers. For your reference, we have as usual set out the table in the appendix that further specifies these special items. Net financial items were minus NOK 95 million, excluding an unrealized hedging loss of NOK 34 million, and were in line with our guidance last quarter. Excluding the impact of currency and non-qualifying hedges, we expect to see net financial items on an annual basis in the range of NOK 60 million-NOK 70 million per quarter.
This decline is mainly because some debt were settled in Q4 and some further debt settled now in Q1. Adjusted for special items, our tax charge was equivalent to a rate of 23.8% in the quarter and 29.3% for the full year. Our view remains for average P&L tax rates to be in the mid-30% range going forward. We ended the quarter with an unadjusted net loss of NOK 268 million, equivalent to a loss per share of NOK 1.07. Normalizing for all special items, our underlying EPS for the quarter was NOK 0.62 and NOK 2.23 for 2016 overall. Moving to our balance sheet and cash flow performance.
Net current operating assets developed favorably to minus NOK 904 million in the quarter, up from minus NOK 1.6 billion last year. This was driven by a high level of incoming payments in the quarter from milestone achievements on projects. We continue to expect our current favorable working capital position to unwind as our major projects progress, and still see this happening over the next 12 months. Due to our improvement programs and ongoing initiatives to optimize cash flows, we remain comfortable that we will see a more normal working capital level of around NOK 1 billion-NOK 1.5 billion through 2017. That is equal to about 5%-7% of revenue.
We had net interest bearing items of NOK 1 billion at the end of the quarter, down from just below NOK 1.8 billion at the end of the previous quarter because of the favorable effect of our working capital position. On net debt to EBITDA under the year at 0.7 times, we continue to expect to exceed our conservative target level of one times net debt to EBITDA during 2017. Our total liquidity buffer is robust at NOK 7.5 billion. This includes our undrawn NOK 5 billion revolving credit facility with a leverage covenant at 3.5 times. This position continues to give us good financial headroom going forward. As a reminder, the credit facility is secured at very favorable terms, with the margin starting below 1%.
Of the NOK 1.9 billion of debt maturing in 2017, BRL 0.4 billion has already been settled at the start of the year and was related to local debt in Brazil. The other NOK 1.5 billion is a bond maturing in June, where we are evaluating options in the debt market or alternatively settlement from available liquidity reserves. As of the Q4 , our Return on Average Capital Employed for the group overall reached 5.4% versus 7.7% in the year-earlier period. This decrease reflects the impact of restructuring costs and other special items over the last year, as well as some normalization of our working capital. Excluding special items, our Return on Average Capital Employed was 10.4% versus 15.6% last year.
There's also the effect of recent investments that are yet to contribute to earnings. Our group capital employed was NOK 8.4 billion at the end of Q4. Of this, around NOK 1 billion was linked to facilities and technologies that did not contribute to earnings at the end of Q4. Our cash flow from operations in the Q4 was NOK 1.5 billion. Our investing cash flows totaled NOK 762 million in Q4 and included our acquisition of the 70% stake in the company C.S.E. in Brazil. We ended the year with an overall Capex spend of NOK 626 million, slightly on the low side of our previous guidance of around NOK 700 million.
Since our major Capex expansion programs have finished this year, we see 2017 at even lower levels, we now see overall Capex and R&D at roughly 2%-3% of revenues going forward with flexibility. Now on to Subsea. Q4 revenues were down 29% year-over-year. Good progress on key projects slightly mitigated the effect of lower order intake and reduced volumes from Subsea services over the past year. Importantly, our major projects continued to progress as planned, we continue to realize significant benefits from our improvement programs, helping to offset market headwinds. As a result, our underlying Subsea EBITDA margin was only slightly lower year-over-year at 9.7%, despite the significant drop in volume.
After the expected effect of higher depreciation, our Subsea EBITDA margin was 4.9% excluding special items, down from 6.6% a year ago. Full year Subsea revenue declined 21% to NOK 16 billion. We achieved an underlying EBITDA of NOK 1.4 billion. This was equivalent to a margin of 9.5% versus 10.2% in 2015. It's thanks to our continuous improvement efforts, cost reductions, and strong execution. Special items for Subsea in the quarter consisted of restructuring costs of NOK 31 million related to the company reorganization and recently announced capacity reductions. There were also NOK 391 million of write-downs of fixed assets and technology. We continue to see a challenging market for Subsea in 2017, particularly in terms of delayed project awards.
We expect revenues to be down around 25% from 2016, with slightly more than 20% coming from aftermarket services. We also see underlying EBITDA margins slightly lower year-on-year, despite a continued strong momentum from our internal improvement programs and our efforts to adjust our cost structure to the lower volumes. We had a Return on Average Capital Employed for Subsea of 4.1% in the quarter. This reflects a number of factors impacting our 12-month volume performance, including restructuring costs and the level of working capital. Excluding special items to Subsea Return on Average Capital Employed was 9.6%. In terms of order intake, our Q4 book-to-bill was up versus last year at 0.8 times, and our backlog remains strong at NOK 14.5 billion. This is equivalent to almost 12 months of Subsea revenue.
We are seeing high tendering activity and are currently tendering for around NOK 35 billion of work in subsea. On to field design. Field design revenues were down 12% year-on-year, due in particular to lower volumes in the U.K., North Sea, and Asia-Pacific. This was partially offset by growth offshore Norway. Special items within field design during the quarter totaled a net loss of NOK 3 million. Adjusted for this, the underlying EBITDA was NOK 228 million, with a margin of 8.2% versus 7.5% a year earlier. EBITDA, also adjusted for NOK 20 million of technology impairments, was NOK 199 million, with a margin of 7.2% versus 6.4% a year ago, helped by strong resource utilization.
In line with previous guidance, field design revenues declined 17% through the year to NOK 10.7 billion. We still delivered an underlying EBITDA of NOK 795 million, with a margin of 7.4% versus 6.1% last year, helped by our improvement efforts and strong execution. The Q4 order intake was down year-on-year and totaled NOK 1.5 billion for field design overall, and Q4 book-to-bill was 0.5 times, down from the same period a year earlier. Despite the tough market, tendering activity is good, and we are currently tendering for around NOK 15 billion of work in field design. This is similar to the previous quarter and reflects international work as well as good volume of modification work offshore Norway.
In terms of our outlook for field design this year, we expect a modest pickup in activity in MMO. We see overall revenues for field design up around 10% from 2016, driven by MMO activities and helped by the recent acquisition in Brazil. We expect underlying field design EBITDA margins slightly lower year-on-year, primarily due to a changing revenue mix. On to the order intake and backlog performance for the group as a whole. At NOK 4.1 billion, overall Q4 order intake was equivalent to a book-to-bill of 0.7x. This was lower than in the Q4 last year and was helped in particular by subsea, which saw a book-to-bill of around 0.8x. It is worth noting that for 2016 overall, we have in total booked an order intake of NOK 17 billion, equivalent to a book-to-bill of 0.7x.
Our backlog was NOK 31.2 billion at the end of the quarter. This is equivalent to around 1.2 times our revenue over the last 12 months. Overall tendering activity is at good levels, although delays in project awards remain common. In total, we're engaged in tenders with an estimated sales value of around NOK 50 billion. As a reminder, our backlog does not include the majority of service business or potential growth or options on existing contracts. Finally, I would like to remind you of our medium-term financial guidance. As you can see from this slide, our three key medium-term guidance themes and other financial policies remains largely unchanged. As Luis mentioned on dividends, we have a relatively healthy backlog, reasonable visibility, and a solid financial position.
Given the current market conditions, we also this year consider it prudent to maintain our financial position by conserving additional cash. This gives us increased flexibility to manage the company through challenging market conditions and to position ourselves for the recovery. Still, to be clear, dividends are an important part of the company's long-term financial strategy, and our policy remains and aims to pay between 30%-50% of our net profit over time, either through cash or through share buybacks. To sum up, in what continues to be a very challenging time for our industry, we once again delivered strong project execution and a good underlying financial performance in the Q4 and for the full year 2016. Despite lower revenue, we have reported steady underlying margins as we benefited from our continuous improvements and from adjusting our cost base.
At this stage, our outlook for 2017 still indicates overall revenues down by about 10%-15% this year versus last year, with activity growth in the MMO area of field design. As previously indicated, we still see underlying EBITDA margins for the group overall slightly down year-on-year. We will continue to drive through our efficiency improvement program to offset the impact from falling volumes. We are taking out the effects of our ongoing reorganization.
As communicated, we have now fully implemented the new organizational structure of Aker Solutions. We will from the Q1 of 2017 start reporting according to our new structure with two primary segments, projects and services. Historical pro forma numbers with supporting key financial KPIs can be found in the appendix to today's presentation. Please reach out to our investor relations department should you have any questions related to this set of pro forma unaudited financial statements. Thank you. That was the end of our presentation here today, and we will now open up for Q&A.
Thank you. As Trine said, we are prepared to take some questions now. We will take questions both from the audience here as well as our webcast audience. If you are following from the webcast, please send your questions using the email system. We plan to end the session at 10, I would like for you please to limit your questions to one and one follow-up, and to please introduce yourself by name for the sake of our webcast audience. We also have some microphones that we need to use. Thank you. Tage Fanebust.
Tage Fanebust from SEB. Can you explain what is driving the improvement you're seeing in the Norwegian modification market currently?
Yes. Thanks, Tage. It's a good question. I think very pleased to see that the market's moving, was actually one of the markets that slowed first for investment reasons. I think that it's time to come back. The costs have come down. I mentioned that we have lowered the cost of modification by about 40% across the border. There, of course, that makes more projects viable and break-evens lower. I think it's same position with clients investing more. That's the main reason for it in my view. Great efficiency gains on that area in terms of productivity.
Do you expect to see that same development happening in the UK sector going forward? There is more maintenance.
Yeah. I think I would say that probably UK is a bit more challenged in terms of because of the volumes and so on. We see some activity there. People start to look as you probably noticed the customer profile in UK is changing with, you know, the smaller companies, I would say smaller operators taking over from the big producers. We see that those guys will do something there, so we are quite hopeful at market. We have, of course, a great position there.
Okay. Thank you.
Thank you. Silje-Marie R. Johansen.
Thank you. Silje-Marie R. Johansen, Arctic Securities. I was just wondering, you had a very good subsea order intake, could you comment a bit on the region for the NOK 1 billion subsea contract that is undisclosed?
Yeah. I think the order intake was better, not I wouldn't call good. I think we're still far away from good in my view, considering the capacity in industry. Unfortunately cannot comment. We're not allowed for the time to comment, we have to steer yourself from that one.
Okay. Thank you. Just in terms of a future order intake, and the tenders you're seeing out there, is it a general trend that you're seeing more smaller contracts but higher volume, or how do you perceive that trend?
Yeah. Well, bigger of course-
relatively small.
Yeah. Relative to count to Kaombo, for example, in Angola, there's no Kaombos out there right now. There's some very interesting prospects, for example, the Liza, ExxonMobil Liza in Guyana. We have some interesting projects in India. I would expect to see more tiebacks starting. There's a lot of tiebacks there, I think I not mentioned the amount of studies we performing right now. It's very pleased to see how occupied my capable front team is these days. I think I would see a mix of large and tiebacks.
We expect the tiebacks first, and as confidence grows with clients around the cost reductions and the stability in oil prices and the balance between supply and demand, we expect more few greenfield to be in function further down the line.
Okay. Thank you. Just one quick follow-up. When do you see the timing on that?
Very hard to predict, and I guess I've been repeating that for the last three years. We expect that with the new cost, and I think some of the clients are talking about the break-evens, and Statoil is very vocal about the drop in the costs in Zappa, for example, and Johan Castberg, we've done studies for them. We expect that probably for the second half of the year, we'll see more of those greenfields being sanctioned and more tiebacks early on.
Okay. Great. Thank you.
Thank you. Were there any further questions in the room? No. In that case, we will take some questions from our webcast audience. The first question is from Philip Lambert, Credit Suisse. One of the areas that investors struggle with generally across the space is what new cycle profitability looks like in the subsea space. Backlogs continue to shrink, plant utilization continue to suffer. Can you talk about how you see the competitive environment shaping up? Are there any indications of irrational behavior?
Yeah. I think this market has all been competitive. Also there's no question that's too much capacity in globally. Everybody invested in the previous cycle. To give you some perspective, last year, only less than 60 customer streams were awarded globally, and that's probably can run four plants. We have quite a lot of capacity installed, and we actually have seen some of the competitors already curtailing capacity. In our case, we're very lucky to start the cycle with very large projects, Both in Africa and Brazil and also down in Malaysia. In terms of rational behavior, I think the price of under pressure, and that's why we're focusing so much on our costs, and that's what I think we can focus on.
I can't expect the price to go up, considering in the near term, due to the capacity, existing capacity. When it comes to people, I think we have less capacity now across the whole industry, which can be a concern. In Aker Solutions, we're protecting our capacity quite a lot, actually, compared to others.
A question from Frederik Lunde in Carnegie. How do you view the competitive position of Aker Solutions versus Kvaerner ahead of the next wave of awards on the NCS, such as Johan Sverdrup and Grosbeak? Would it not make sense to merge the companies to be the undisputed NCS field development champion?
I guess it sounds like a remarriage. I guess we're different companies. We have different profiles, and sometimes we collaborate like we did in Johan Sverdrup, very successfully. I guess I don't wanna compare ourselves to Kvaerner because we're different companies. We are more engineering, we have maybe more, they have more greenfield and so forth and large construction. We sometimes complement, and sometimes we decide to work with other partners, so it's very hard to compare between the two. Our only What my team and I concentrate now is on our competitiveness, and I'm very pleased to see what we've been doing to this company through a very, very difficult cycle.
There's an additional question from Frederik. Do you expect further restructuring charges in 2017, or is the cost base now adjusted to what you expect to be trough levels?
Yes, I should answer that. Based on what we now see ahead of us and what we indicate related to activity levels for 2017 and forwards, we don't expect any further restructuring charges or impairments.
There's also a question from Eirik Mathiesen in DNB Markets. Why have interest-bearing receivables increased from 90 million NOK to 437 million NOK quarter -on -quarter?
Yeah. It's, as you're saying, it's an interest-bearing receivable. It's short term. It's client facing, and it's a natural course of business.
Eirik has another question as well. In the Q4 report, you say that impairments of intangibles relate to technologies where the market outlook has changed. Can you please elaborate on what technologies that are affected, and what has changed recently that has triggered these impairments now?
Impairment testing is something we do on a continuous basis. As you've seen over the last Q8 , we have had larger and smaller adjustments through this downcycle. It's a continuous process where we update according to what we see ahead of us, and this latest set of value adjustments reflects our most recent outlook. It's across the portfolio, and I don't want to go on specifics related to which type of assets and which pockets of technology it relates to.
Another question from Philip Lambert of Credit Suisse. Can you talk about technology development within subsea? The market looks to be evolving, and future needs seem to be changing with respect to size and weight of equipment on the seabed. Can you discuss what progress you have made in this respect and how you may be approaching it differently to competitors?
Okay. I would say that the focus for news has changed a lot from most from new solutions to standardization. That's been working very hard towards standardizing, making the products more cost effective and easy to fabricate and so forth to increase productivity. We're not stopping. We have some very interesting technology developments. Of course, we're investing quite a lot also in terms of digitalization of the company. Big leap for us to be more cost effective internally and also more relevant to the clients. In terms of subsea equipment, again, smaller that's always the case. We're also looking, of course, the smaller the equipment, the easier to install. There's a balance between what installation costs in the SURF and in subsea.
We are, in some ways, all working towards reducing costs in the industry. How we're different from competition, I think we have great engineering, I'd like to mention a few examples. We just qualified very fresh news from last week. We finished qualification for the Power Jump that we have developed with Baker Hughes. Fantastic results. I think it's a great product praised by clients, all electric, so there's no hydraulics. Up to pump gas and oil up to 80% gas content. Amazing results. We're investing in new pumps, boosting systems. Very important, to boost the output from existing fields. Across the board, I think we're investing on some technology for the future as well as making this technology more cost effective.
A question from James Evans of Exane. Can I ask about subsea services? The 20% decline year-over-year is significant given hopes for some more short cycle spending from customers. What's driving this? Is it the lower commissioning activity related to tree installation work? Is it fair to say that the revenue in this business line are now about NOK 2.5 billion in 2017?
I'll let Svein comment on the specific numbers, but I think it's a combination. Of course, for us, we actually have a quite high activity in the offshore installation because we are installing large projects. Amazing traction in West Africa and specifically Angola. That part for us is okay. In some markets, of course, we have less things to install, but overall, globally, we are quite busy when it comes to installing equipment. I think that, of course, clients are trying to curtail costs to save cash across the board. If, it's pretty much like you in your house, you have two cars, you can just park one until after the winter, right, to get it fixed if you can run one car.
People are trying to curtail some of the maintenance of existing stocks and so on. Also there's a price effect. There's no question that clients are fighting for price everywhere. Finally talk about the numbers.
Yeah, on the numbers, you know, without giving you the specific number, what I did say, Subsea delivered NOK 15 billion on the top line in 2016. I indicated we will probably be down around 25% in 2017. I also said to expect about 20% of that from Subsea aftermarket. That should be specific enough on indicating volumes. Then as we stated, you know, for us in terms of installation and commissioning activity, we have significant projects that are going through installation and commissioning activity for the time being, so especially West Africa.
A question from Amy Wong of UBS. Can you provide more details around the NOK 35 billion Subsea tendering pipeline geographical breakdown? Are you seeing client acceptance for integrated Subsea equipment and service model, or are clients still using more traditional procurement strategy? two questions.
Okay, I think it's two questions. Start with the first one. When we're talking about the NOK 35 billion, it's basically the projects that are being tendered now, and we're seeing more work coming in some large projects being tendered later this year. Across the globe. We see, of course, some gas projects taking some traction, especially in India and so on. We have new basins, like I just mentioned, in the case of ExxonMobil Liza in Guyana, which just beginning, just a small size of that particular play. It's very promising. We don't see much activity in Brazil with Petrobras now since they are developing the projects they have at the moment.
I expect Leda to come further, but it's been delayed a bit further, but it's not on the numbers of tenders yet. I guess across the scope, we have some projects been there before or been there for some time into cost reductions, but it's a large spectrum. On the second part, I think that, I feel we've not seen a change of people asking for combined offers as some of our competitors are claiming that's happening. I think clients are listening. They are listening to how they can lower costs. There's no question if you mention percentage reductions, people will pay attention. I see that most of the reductions, we see that it comes from the front end. That's where we see where we can lower the costs.
That's where we start to define, you know, Subsea architecture, the Subsea equipment, and it can combine with the vessels that are available and so on and more cost effectively. I think sometimes you see clients mostly asking for traditional tenders, and then they give an option to provide something integrated. Of course, we have our alliance partners, in some cases, alliance that we choose project by project. We have some like the alliance with Subsea seven for HBP, where we do that all the time, looking to the combination of all the tiebacks that they are developing now. It's a mix, and I think it always come as an option in some cases.
A question from David Vos of IHS Markit. Could you provide some thoughts and add some color on Aker Solutions' competitive position going forward now that the supplier landscape is changing with the TechnipFMC and the GE Oil & Gas Baker Hughes mergers? How will this changing landscape affect Aker Solutions' strategy?
It's a very good question. It can be a very long answer. I think I'll start with the competitiveness because this is one of my favorite subjects and my team subjects, some of my member teams here today. I think we are working so hard in the costs. I haven't seen anything like it. I mean, the enthusiasm of the employees across the whole company to find ways of working, which are, you know, simplified, I mentioned also some digitalization. We're working very hard. I doubt anybody's working harder than us. I think in terms of competitiveness, I think we are getting there, and we're gonna continue pushing. That's why it's called The Journey.
It's a long journey that the industry needs badly because we're not competing against ourselves only, we're competing with different source of energies and different source of oil production, hydrocarbon productions across the globe. We're gonna continue that journey, and we won't end, I don't think, ever. When it comes to our competitive position against peers, we're not losing contracts. We're in a few, and they're not really being awarded. A very early days to say how we are, but we can see that we are competing face to face with almost everyone. As the new constellation, second part of the question, I think you're talking about, I guess, the companies being merged, integrated, and that's only a matter of balance sheet.
I don't think those large companies will have the flexibility we have and the speed of decision that we have. That's very important for us. Of course, they have their larger companies, they have a large geographical footprint, so we have to see how that's gonna play in our particular market. I think we are well positioned not only with what we have in terms of competitiveness and technologies, but also in terms of the partners that we work on when it's necessary. That's my view on that.
There's a question from Jamie Maddock of Deutsche Bank. What is the underlying regional split of the NOK 60 billion of subsea and field design tenders, and how beneficial have the alliances proved, and what more, if anything, could be done to help?
Oh, this is fine today on the webcast. Basically, I think I have answered that question on the presentation about the split being two-thirds subsea and one-third in field design. Geographical footprint is across the globe. I think we mentioned that in the field design, we see Norwegian market picking up. That's very good 'cause that's our home market, and we're very strong here. Construction is good balance between local international, which we are very well positioned to do so. I think that was the nature of the question, I think. There was second part, but can you repeat the second part?
Yes. How beneficial have the alliances proved, and what more, if anything, could be done to help?
Okay. I think that the alliances, they're very different, the ones we have. I usually try to separate the alliance between the commercial, the cross-development alliances, and the technology alliances. Let's start with technology alliances, which is the ones we have with the likes of ABB, MAN, and so forth. We are working very hard to reduce the cost of, for example, subsea compression and electrical systems and electrification of fields. We see a huge interest. I just mentioned Power Jump in electrical. There's a lot of things we are doing on that spectrum that I think is the equipment of the future in terms of environmental production and so forth. Those are going very well, and the clients are placing studies. They're interested.
As you know, the market's not that buoyant, as if you can say, so not the orders are being awarded. The progress in the technology alliance are very good. When it comes to the commercial one, we have a few of those, one with Saipem for SURF, and one with SBM for FPSO subsea. We see traction there, but as I said, the projects are not progressing to the speed we want. Clients are testing, they are interested to hear what I have to say, and only the future will tell if those alliances are really gonna play. When it comes to technology, again, the Baker Hughes have provided some very interesting knowledge between the two markets. We don't overlap.
We develop a very fantastic product that I have a big faith for the future, which is Power Jump . In the future, I think the last part, difficult to say. I know every down cycle brings a consolidation, that's not different now. We have to see if that's gonna bring really lower costs and or if just a survival mode by some companies. I think that early days to comment how to be the future of the industry.
Okay. We have two more people with questions. I'll take Christopher Mollerlokken from SpareBank one Markets. Statoil has yet again lowered its Capex estimate for the Johan Castberg project. Is it due to simpler design, or do you see further pressure on your priorities and margins from your customers?
I think that's a great example of what you can do, of what you can do if you need it. You know, we have to lower the cost. If you remember, the Baker were quite high for this project, was actually not viable under the current market conditions, and now becoming very attractive. So I think, I think it's actually how it's going to have a combination of the two, but the simplification is big. I think I said here today about, you know, competencies and improvements and designs and standardization, always going towards projects like Johan Sverdrup, who demands new technologies, demands new equipment and very effective operations. But there is, of course, also a cost component.
It's, when you think about drilling, the rigs, rates are lower, everything else is lower. There's a component there. I think the big savings are coming from simplification and good engineering by Aker Solutions.
Our final question from the webcast audience is from Maria Laura Adorno from Goldman Sachs. 2016 revenue was down about 20% year-over-year. This year you expect full year 2017 revenue to be down 10%-15%. Backlog for execution is lower than what you had at the time of the q4 Q4 sults for 2016. Could you please be more specific as to what the key drivers are that give you confidence in the revenue decline being lower year-over-year?
Compared to a year ago, looking into 2016, the visibility is actually, you know, pretty similar and slightly lower. I would say, you know, roughly two-thirds in hand this year, slightly higher a year ago. We did indicate significant tender volumes, and we're hopeful that some of this will be concluded and move forward in the first half of this year. I have to remind you that in our backlog, you know, we don't have the majority of our service business call offs, you know, options and natural growth, which is a key component of this business reflected in the backlog. The outlook for 2017 in terms of visibility, I consider to be pretty good.
That is it for questions from our webcast audience. Unless there are more questions in this room, I would like to thank you for joining us here today.
Thank you.
Thanks.
Thank you.