Good morning, welcome to the presentation of Aker Solutions result for the Q2. My name is Tove Røskaft, I'm heading up communications at Aker Solutions. With me today are Luis Araujo, Chief Executive Officer, and Ole Martin Grimsrud, Chief Financial Officer at Aker Solutions. After their presentation, we will have time for a Q&A session. I will now hand the mic over to our Chief Executive Officer, Luis Araujo. Luis, the mic is yours.
Thank you, Tove. Good morning, all, and thank you for joining us on this call today for another quarterly presentation. This has certainly been an extraordinary three months for our world, and through the COVID-19 pandemic, countries have been locked down to prevent the virus from spreading. For Aker Solutions, the top priority was to protect the health and safety of our people, then we temporarily closed down some sites and implemented home office solutions for thousands of employees. As the quarter progressed, most countries in Europe and Asia Pacific started to reopen, and life and business could begin to return to some sort of new normal. In other regions, like Brazil and USA, we see a rising number of people affected by the virus.
We managed to protect our people in these locations, and the impact on our business has been less dramatic than the worst-case scenarios that we were prepared for. In fact, I believe we managed this unprecedented situation quite well. We kept our productivity high, and we made key deliveries to our clients across the globe at the right time. This, as an example, included subsea deliveries and successful installations to Equinor for Troll and Johan Castberg projects. For Petrobras' Mero-1 in Brazil, important pre-salt project, and to CNOOC's Lingshui development in South China Sea. I'm extremely impressed and proud of our employees who have handled a challenging situation so well. We have kept our commitments working in close collaboration with clients. We even broke new ground when we installed the first seven inch vertical subsea tree to Equinor during the quarter.
This is part of our intelligent subsea portfolio and a new standard for the Norwegian Continental Shelf. We achieved this important milestone ahead of our competition. Back in April, we updated our targets to reduce costs by NOK 1 billion on an annualized basis. Today, we are about 90% complete to reaching that target. This includes rightsizing of the workforce of about 5,000 people in the quarter and over 7,000 people since the end of 2019. That actually means over 30% of our workforce. In addition to the announced annual target, other ongoing measures to improve cash inflow include subleasing 1/3 of the Aberdeen business park to an undisclosed energy company. We expect to finalize this agreement in the Q3. We are very pleased to be sharing our facility with a key client, which should strengthen this key relationship.
Three months ago, I said that this could be the most disruptive quarter ever in our industry, and this is probably still correct today on a global basis. I also stated that governments could make a big difference by implementing new measures to boost activity. The Norwegian parliament in June agreed on a series of measures that had an immediate impact on suctioning of new projects. This is quite positive for Aker Solutions due to our presence and track record in the Norwegian Continental Shelf. The new Norwegian government measures have already had a positive impact on our order intake in the Q2. I will come back to this when we go through the new orders slide. Now let's go to the key numbers for the quarter.
Overall operating revenue for the Q2 was NOK 5.4 billion, down 29% for the same period last year. Our Q2 EBITDA was NOK 232 million. Excluding special items, EBITDA was NOK 353 million, down from NOK 629 million a year earlier. This was equal to an underlying margin of 6.6%. Order intake continued to evolve favorably and was strong at NOK 7 billion in the quarter. The order backlog increased to NOK 26.9 billion at the end of the Q2. We also ended the quarter with a healthy liquidity buffer of NOK 5.5 billion similar to Q1 liquidity. Afterwards, Ole Martin will take you through the numbers in more details.
Our order intake in the Q2 was NOK 7 billion, giving a book-to-bill of 1.3x . Aker Solutions were awarded a letter of intent from Equinor for the delivery of a subsea system for the Breidablikk project in the North Sea. The scope of the project covers a complete subsea production system, including 15 subsea trees and manifolds in the phase I. The contract also includes options for the second phase, and also includes the Kristin South development. Value of the options will be booked when they are called off by the client. Also from Equinor, we signed a letter of intent to deliver the subsea production system for the next phase of the Åsgard natural gas development in the Barents Sea. The scope includes one template with a manifold and two subsea production systems and control systems.
For Aker BP, we signed a two year contract extension for maintenance modifications for Aker BP, Ula, Skarv, Valhall, and Tuna fields offshore Norway. Thanks to the oil incentive package in Norway, Aker BP Hod field is now up for sanctioning, and we have been awarded the engineering work for development phase to be executed under the existing alliance model. In the North America market, we signed three important contracts. An umbilical contract for Murphy's King's Quay project through Subsea 7. For Husky in Canada, we signed a four year asset integrity management contract. Finally, for ExxonMobil, we signed a one month extension on the Hebron EPCN project in anticipation for a five year renewal expected to be signed in the Q3. We also achieved an important milestone for our 2025 to 2030 strategy.
Aker Solutions and Norcem, a subsidiary of HeidelbergCement, have signed an agreement as a firm step towards the engineering, procurement, and construction delivery of a CO2 capture plant at Norcem Cement factory in Brevik, Norway. We expect the contract award for this project to be booked in the Q1 of 2001 after sanctioning by the Norwegian government. Growth in existing projects, driven especially by life of field work in Norway, also contributed to the strong order intake, showing the resilience of our service business. Our global front-end teams remain busy as we now won another 47 new studies in the Q2 . This totals 89 studies for the first half, compared to 74 in the first half of 2019. Eight projects have, during the first six months, turned to FEED, and five materialized into full-fledged projects.
Even during a severe downturn like this one, we continue to see this as a sign that our strong position in front-end is a key differentiator. The focus on low carbon and renewable solutions was reinforced by the number of studies where CO2 reduction is either part of the scope or the main purpose of the study. A total of 20 out of 89 studies were related to renewables and low carbon, showing that our 2025 to 2030 strategy is progressing well. Now to the market update and outlook. The list on the right of the slide shows an overview of all the projects that could see come through in the next few years, boosted by the temporary Norwegian tax measures. We are already working on Breidablikk, Åsgard West, Troll electrification, and the Hod projects.
Another project we are very excited about is the NOAKA field development that Equinor and Aker BP now have agreed to develop. We believe we're well-positioned to take a key role on this development through the front-end studies already performed by Aker Solutions, through our digitalization effort, as well as our existing alliance. Projects to decarbonize oil and gas are high on the operators agenda, and will include electrification of assets, possibly also by Wind for oil solutions. Aker Solutions aim to take our fair share of the projects on this list due to our technology position and track record in the Norwegian continental shelf. It is fair to say that no similar schemes have been introduced in the rest of the world. We are in a very good position having the North Sea as our home market.
A large part of our execution engine is located in Norway, but also supports our global delivery model. Sanctioning activity in the international market has yet to pick up, and the impact of the pandemic is still uncertain. The preservation of our capabilities in Norway through the incentive scheme will position us well for when the market recovers. The same reasoning apply to the low carbon and renewable segment. We rely heavily on our talented workforce for the forecasted energy transition. At the end of the Q2, the outlook and discussions with customer are more constructive than a few months ago, supported by oil prices that are back above NOK 40. Aker Solutions is currently bidding for contracts totaling over NOK 40 billion even after the strong sanctioning in Q2.
To sum up, we ended an extraordinary quarter with a strong order intake, a reduced cost base, and a solid liquidity buffer. Uncertainties and volatility remain in international markets. We are cautiously optimistic about our future. Ole Martin will take you through the numbers in more details. We'll come back for questions later. Ole Martin.
Thank you, Luis, good morning. I will now take you through the key financial highlights of the quarter of our segment performance and run through our financial guidance. As always, all numbers mentioned are in a Norwegian kroner. We will start with the income statement. Overall operating revenue for the Q2 was NOK 5.4 billion, down 29% year-on-year. The revenue decline was mainly driven by impacts of the coronavirus and from the Field Design segment following the record activity level last year. Our reported Q2 EBITDA was NOK 232 million. Excluding special items, EBITDA was NOK 353 million, down from NOK 629 million a year earlier.
This was equal to an underlying margin of 6.6% compared to 8.4% in the same period last year, reflecting the lower activity level and the impacts of the coronavirus, partly offset by swift implementation of the NOK 1 billion fixed cost reduction program. We have included restructuring cost of NOK 117 million in the quarter related to additional rightsizing of the organization following the lower activity level. Depreciation and amortization was NOK 294 million, in line with our previous guidance. We continue to expect an underlying depreciation, including the effects of IFRS 16, to be around NOK 1.2 billion per year. Our reported Q2 EBIT or operating profit decreased year-on-year to minus NOK 63 million from NOK 98 million.
Excluding special items and impairments, EBIT was NOK 62 million and the margin was 1.1% versus 4.3% in the previous year. Net financial items were NOK -132 million in the quarter, excluding a minor annualized hedging loss of NOK -11 million. We continue to see our net financial items around NOK 100 million per quarter going forward. Our P&L tax charge was equal to a rate of 17% in the Q2 related to the negative income before tax. We continue to expect average P&L tax rates to be in the low to mid 30% range over time. We ended the quarter with a net income of NOK -171 million.
Excluding special items, the net income was negative NOK 56 million and the earnings per share NOK -0.23, down from NOK 0.56 last year. Moving to our balance sheet and cash flow performance. Our working capital or net current operating assets ended the Q2 at NOK 920 million. We continue to have a strong focus on cash collection in addition to other measures to improve working capital performance. Following the normalization of our working capital during last year, we expect that the working capital will continue to trend around NOK 1 billion going forward. Our cash flow from operations in the Q2 was NOK 48 million, and our investing cash flows totaled a net negative NOK 156 million. The investments were mainly related to finalization of already committed project-related investments.
As communicated, CapEx and R&D will be significantly reduced to about NOK 500 million for this year, which implies a low investment level for the second half of the year. For next year, we target a further reduction by another 30% to around NOK 350 million. Excluding IFRS 16, we have net interest-bearing debt of NOK 2.4 billion at the end of the quarter compared to NOK 2.1 billion at the end of the Q1. our net interest-bearing debt to EBITDA ended at 2.1x . As a reminder, the leverage covenant on both bonds and the revolving credit facility are at 3.5 times pre-IFRS 16. Our total liquidity buffer at the end of the quarter was at a healthy NOK 5.5 billion, including our revolving credit facility.
In the current environment, our main financial priority remains on cash flow performance and protecting the company's balance sheet. On to projects, where Q2 revenue was down 33% year-on-year, driven by the field design sub-segment following the record activity for brownfield projects last year, as well as the impacts of the coronavirus. This resulted in an underlying projects EBITDA of NOK 268 million, with a margin of 6.6% for the quarter, down from 7.9% last year. EBIT, excluding special items, was NOK 72 million, with a margin of 1.8% versus 4.5% last year. The margins in the Q2 reflected swift actions related to the coronavirus outbreak and, in particular, achievements on the cost reduction program.
Q2 order intake in project was strong at NOK 6.3 billion, with a book-to-bill at 1.6x , increasing our backlog coverage moving forward. Some further details for subsea and field design within the projects reporting segment. Revenue from subsea projects decreased 90% year-on-year, driven by the finalization of certain ongoing projects as well as the impacts of the coronavirus. Revenue from field design projects decreased 41% year-on-year, a normalization we have previously guided for, following the record activity last year from significant brownfield modification and hookup projects in the North Sea. Q2 order intake was strong with NOK 3 billion in subsea and NOK 3.4 billion in field design. The backlog in projects increased to NOK 16 billion, further improving our visibility going forward.
In services, activity decreased year-on-year in the production asset services sub-segment, primarily related to adverse impacts of the coronavirus. However, this improved towards the end of the quarter. Activity in the subsea life cycle services sub-segment remained more resilient. Underlying EBITDA in services was NOK 126 million, with a margin of 9.8% versus 14% in the same quarter last year. This resulted in an EBIT of NOK 63 million, with a margin of 4.9% versus 9.8% a year ago. Q2 order intake in services was NOK 614 million, with a book-to-bill of 0.5x . As a reminder, in addition, a part of the services order intake is short cycle or book-and-turn in nature. The backlog in services ended the quarter at NOK 10.9 billion.
Over to the order intake and backlog performance for the group overall. We have a strong order intake in the Q2 of NOK 7 billion, equal to a book-to-bill of 1.3 times, increasing our backlog coverage moving forward. Our backlog increased to NOK 26.9 billion, and we have now a strong coverage for the expected full year revenues. Our Q2 order intake was significantly better than expected a couple of months ago, driven by the recovery of the oil market and the Norwegian government incentive measures. The outlook for order intake has improved, and we now see encouraging signs for order intake during the second half of the year and into next year. Over to our guidance. During the first half of this year, the activity in our industry has been significantly impacted by the coronavirus and steep decline in oil prices.
As we are exiting Q2, the situation has improved. During the Q2, Norwegian authorities implemented incentives for oil companies to start projects. We expect this will result in a number of interesting opportunities where Aker Solutions is well-positioned. Combined with the recovery of the oil market, makes us more optimistic about the outlook moving forward. At this stage, we expect revenues for 2020 at around NOK 21 billion to NOK 22 billion. Secure 2020 revenues in the backlog are at the moment close to 90%, excluding the book and turn revenue in services. Margin guidance is still challenging and uncertain, at present, we expect full year underlying EBITA margin of around year to date levels, excluding special items, supported by the cost reduction initiatives. We have secured a strong order intake during the Q2, which improves our visibility going forward.
We have implemented swift and decisive cost reduction measures to mitigate the impacts of COVID-19 and the low oil price in 2020. We have cut CapEx by 40% this year and target another 30% reduction next year. We have progressed well on our restructuring plan, where the target is around NOK 1 billion in analyzed fixed cost reductions versus 2019. About 90% of this target has already been implemented in actions. We target this to be fully implemented during the second half of the year. These fixed cost reductions are mainly on overhead costs, including headcount reduction and optimizing our manufacturing footprint. These measures should provide a good foundation for cash flow performance and for protecting the company's balance sheet and financial performance moving forward. With that, I would like you to thank you for listening.
That was the end of our presentation, and I hand it over to Tove.
Thank you, Ole Martin. Moderator, we will now open the lines for questions.
Thank you. If you would like to ask a question, you can do so now by pressing star one on your telephone. That's star one if you'd like to ask a question. We'll pause for a moment to allow people to queue. We will now take our first question from Amy Wong from UBS. Please go ahead. The line is open.
Hi. Good morning. A couple of questions from me, please. The first one is just a bit of housekeeping to understand how the split of the cost savings were achieved in projects and services, and how much was the realized cost saving during the quarter, if, as you implemented 90% of the initiative, but just to understand how much of those savings are actually in your numbers? I'll ask my second question.
Amy, thank you so much for your questions. As we said, we have a really good progress now on our fixed cost reduction program, which boosts the Q2 margins and also then the margins into a remainder of the year. We do not give a split between our segments on the cost reduction program. I would say what's achieved in Q2 equals approximately what we have implemented.
Got you. Okay. My second question is a bit more strategic. Of course, the big talk over the last couple of years have been the integrated model, integrated solutions, FPS and installation. Just wondering kind of where we are now with that debate, especially with the oil price collapse again. What are you hearing from customers in terms of what they really want in the current environment? Are, you know, are they going to integrate it, or are they going back to kind of the separate package, the more conventional way of bidding for projects? Thank you.
Okay. I don't think things has changed since last year in terms of the amount of the quarters going to to split or integrated. As you can see, we won several subsea projects this quarter, which is very good, and they are not integrated. We're still following the strategy. We work with Saipem in a global alliance. We see less projects right now, but that's probably a reflex of the of just, you know, massive curtail in CapEx by clients. We, we believe that the trend will continue going forward as long as we present lower costs by that. We work, still work with Saipem.
When it comes to the alliances with Aker BP, we also work with Subsea 7, and we have several projects to be sanctioned here in Norway for Aker BP, some Tiebacks that are actually included on my list of projects in the last slide. That's how I see it. Certain clients will have preferences, and some clients would be prefer to just award the contracts where they can control. I think it'll be both, and I think we're prepared to serve the clients on both sides. At the moment, there are less integrated contracts in the market.
Mm-hmm. All right. Thanks. That's very good insight. I'll turn it over.
Have a good summer.
Thank you. As a reminder, if you would like to ask a question, you can do so now by pressing star one on your telephone. There are currently no more questions in the queue. I will turn the call back to your host.
Thank you.
We do have another question. We will now take the next question from Mick Pickup from Barclays. Please go ahead. The line is open.
Good morning, everyone. Obviously not a busy call. You've mentioned the HeidelbergCement project in your presentation, and you didn't mention much about wind, and obviously Norway has moved ahead with licensing of floating wind. Can you just talk about any changes you're seeing on that floating wind side, please?
Thank you, Mike. Be good to hear from you. I was surprised to not hear a question from you, so I'm sure you're there. Good to hear from you. A good question as well, and one that actually brings me to a very interesting, you know, subject for us, which is the renewable and low carbon activity. I think the cement factory in Brevik, that's gonna be the first industrial scale project. I would say that everything is agreed and organized. We've done a very large FEED for that, so we need to find the costs. We are ready to do the execution of the project on the EPC with some sort of cost protection as well.
What we're waiting for now is for the government budget to be approved, because there are some, of course, incentives there. That's gonna be around, I think, October this year. October, November. The idea is to start the project, this full scale project, 400,000 tons of CO2 captured, from January next year. The revenue will be booked probably, the order intake will be booked in Q1 next year. I think that is a great progress. There are several other opportunities. Have quite a few opportunities in carbon capture.
The pipeline of projects has increased, for example, from NOK 5 billion to something like NOK 12 billion to NOK 13 billion now, and we see that in scale growing a lot. As we know, CO2 capture is a significant importance to achieve the Paris Agreement goal. We are really very happy about that. We think that this is gonna be a big market for us, and that's just the beginning. We have two projects now, concrete, and the next is, like I said, the world's gonna start to move on that direction, not only in our industry but in several industries, including some carbon capture on FPSOs. We believe we wanna have some, what I call, GreenFPSO s going forward, so we're developing that together with MODEC as well.
I think your second question was about offshore floating wind, and there's no, we have seen no changes.
Yes, yes.
in intention of companies to develop that. We have seen probably noticed as well, some of our key clients making big investments on offshore wind. I think we are well positioned, and the strategy remains. My view is that through the pandemic, there's no change on the CO2 discussions. We expect to see big growth on offshore wind as well.
Okay. Can I just do a follow up? Obviously in the, I'd say the last two to three months, your traditional clients have all gone down a net zero decarbonization route. I'm just wondering if they're contacting the companies like you and your traditional suppliers to see what you can offer. I'm wondering if that has accelerated during the last few months.
It did. I think you probably saw the studies table that for me is one of the key tables in our presentation every quarter, 'cause it shows it's almost a thermometer to say what the temperature out there with clients. They certainly increase. We have 20 studies were actually directed to decarbonization or renewable CO2, we see a lot of traction on that. Of course, because of our position in terms of technology, reminding you that we proudly confirm that our technology in carbon capture is one of the only two has been proven, ours is the only one large scale. We're pretty well positioned for that, clients are coming to us.
It's a huge push, that's not gonna go away with COVID-19, as you probably noticed. I think we are the dialogue with clients are actually increasing, not only for traditional but also for implementing Wind for oil. You probably noticed that Aker BP has mentioned they're considering that, even for, you know, Aker, to do some Wind for oil.
Yeah.
I think that's quite, I think that's a quite, a change. You also notice that, in Norway, the government has decided to allocate some offshore areas, and that should be very important for us due to our presence and also to build a new industry we're just starting now. We are quite bullish about that.
Okay. Thank you very much. Have a good summer.
Thank you. Same to you.
Thank you. We will now take our next question from Michael Alsford from Citigroup. Please go ahead.
Good morning. Thanks to take my questions. I've just got a couple really more around the cash flow. You mentioned a little bit of the effort to try to improve cash generation for the business with the subleasing of Aberdeen. I just wondered if you could give some indication of where you see sort of the net lease payments on a sort of quarterly basis trending towards with those measures that you're putting in place. Secondly, you've done as I say, a very good job of quickly cutting costs. I'm just wondering, you know, often you go first to cut costs. Is there anything more you can be doing to, again, to reduce that sort of operational cost base?
You know, are there other initiatives, are there areas that you could potentially see that saving target increased? Thank you.
Good morning. Thank you for the question. On cash generation and in particular lease payments, as we say during the presentation, we are now 5,000 less people out of Q2 versus Q1. Obviously, that will have an impact on a number of office seats that we need and facilities. We have been successful in subleasing in Aberdeen and other places around the world, and that will obviously reduce our lease payments going forward. In addition, we are working on our manufacturing footprint, which also is a driver for the cost reduction program, and that could also potentially give us lower lease payments going forward.
Second part of the question on the cost re-reduction initiatives, I would say that a NOK 1 billion cost reductions, as we said, we have already achieved 90% of it during the quarter. There are multiple other initiatives that could boost that target into the second half of the year. We saw that, you know, the Q2 performance was strong on the cost reductions, and that will also provide a good basis for margin expansion going forward.
Just to want to complement what Ole Martin said. On the cash flow, we see some projects with certain NOCs who are pretty negative on cash flow working capital, and we are delivering those projects, so we expect that also to have an impact going forward. On cost, you know, that's a good question. We'll keep, we're gonna continue hunting costs, I guess, in the system. Yeah.
Okay, thanks very much.
Thank you. We will now take a follow-up question from Amy Wong from UBS. Please go ahead.
Hi, guys. Well, I didn't wish you a happy summer, but so I thought I'd go back in the queue. I had just two more questions from me. On the cost savings, perhaps I'm just gonna ask this way, the NOK 900 million of cost savings implemented, would you say it was more kind of achieved at the beginning of the quarter, which would be, you know, quite interesting, but or more kind of towards the end of the quarter that you were able to achieve that run rate? My second question, I know it's a little bit early to be talking about 2021, but, you know, for you guys it's, you know, you had a very interesting quarter in terms of the sentiment changed drastically over the last three months or so.
Your order backlog for execution in 2021 is NOK 29.7 billion, almost flattish compared to you know, same time last year. Arguably, the order intake pipeline is still looking quite good over the next few months or so, or, you know, in the near term, I would say. You know, at this point, you know, would you, is it conceivable that 2021 revenue can actually be higher than 2020? What are your thoughts on that? Thank you.
I would, I'll let Ole Martin answer the cost-saving questions. Can say that we took very strict measures, extremely good, to work through operation with the management team. I think I'm very proud what the guys did here. It's something that we don't like to do. We don't like to, of course, lay off people. That's worst thing a manager can do, but needs to be done. The guys act very quickly and Ole Martin can give a more perspective on that. On the order intake in 2021, you know, I guess, if you asked me this, if you had asked me this question, Amy, on in March, then I could never give you an answer. It's still pretty much the same when it comes to international markets.
You know, it can go anywhere, but what we see is that we have some key differentiation and of course our whole market has actually, you know, provide some good backlog for us and good support. I mentioned there are several projects on the list that you see in my last slide that I think we are incumbent through alliances, so forth. I mentioned NOAKA, for example, and it would be a pretty large development, probably the last, at least in the list of one of the large developments in Norway remaining to be done unless we find more oil. Also Houston, so which is, you know, pretty similar to Casper.
There's a few projects I think we are very well positioned to achieve going forward and should support 2021. If you remember back in the end of 2019, early the year, I mentioned several projects that we thought to be sanctioned going forward. They're still out there. For example, total electrification, whether we want the FEED with an option for an EPC. When that's converted to a project, that will be a significant, sizeable project for us. I also mentioned some projects in Africa. Quite frankly, everything was put forward, at least 12 to 18 months.
So, as, the market stabilizes and, and the imbalance of production , you know, easy out, then I think we will see some of those projects coming back, and some of them are still., We just, for example, this month, concluded the, the feeds. We are concluding now in the quarter the feed for Jansz-io. So now it's about waiting for sanctioning and then people being cautious, of course, with the, with the CapEx cuts. So I think things can be good, but it's very hard to predict as usual. So we take one, one quarter , per step every quarter, so. and what might you said about the cost, if it was early or late?
Yeah. On the cost reduction side, as said by Luis, we are proud of what we have achieved now during the quarter. We have then 5,000 less people after three months, which is a achievement. We kicked off this program early in the quarter, and we saw quite good progress early. Average for the quarter, 90%. I would re-expect into second half of the year to have a 100% achievement, should be more in the Q3 versus Q4.
Got you. All right. Thanks very much for the insight, and happy summer to you and everybody at Aker Solutions. Thank you. As a final reminder, if you'd like to ask a question, please do so now and press star one on your telephone. That's star one to ask a question. We will now take our next question, a follow-up question from Mick Pickup from Barclays. Please go ahead. The line is open.
Morning, all, again. Given not many people, I'll jump in again. Very quick one. You mentioned about subletting of buildings in Aberdeen, and I assume that you're doing rationalizations of other footprints. Given you have such a big IFRS 16 impact on your balance sheet, does any of this rationalization mean that will come down?
Yes, you're right, Mick. When we sublet, we will then have also then opportunity for a lower IFRS 16 impact on our balance sheet. You're right. It will come down.
Yeah. It's fair to say that, of course.
Of course, the market stuff, and that's why I'm so pleased about the Aberdeen, which is, of course, one of the most affected locations, I would say, with too much capacity for people. The most important part there is that we're gonna be sharing the office with a key client, and that's important for us to be close to that client. That is a growing client for us. One thing that we can discuss, of course, for hours would be the fact that how many offices we're gonna need going forward. We still have right now a large number of employees working from home, and they are producing quite well, I might say. We are rationalizing.
Yeah. Yeah.
What's gonna be the future of footprint of the company. We, what we noticed that some of the more creative tasks are better done face-to-face, and we are allowing these people to come back. In certain offices, we still only have 25% of the people back, and that's and that's okay because people are producing. Actually, have productivity has gone up comparing to when people were in the office in certain cases, so.
Okay. Thank you very much. Cheers.
Thank you. There are currently no more questions in the queue. I will turn the call back to you, Host.
Thank you. We can start with some of the typed questions. The first question is from Nick Konstantakis from Exane. I believe the first question he had has already been answered regarding the cost-cutting, but he had a second question. You had NOK 60 million impact from COVID-19 in the Q1. Any such impacts during Q2?
Thank you for your question, Nick. Yeah, you're right. We had NOK 60 million, as we said, as a part of the Q1 presentation. Revenue impact in Q2 is even higher. I would say slightly above half a billion is the revenue impact in the quarter related to the coronavirus, as we had restrictions in most locations around the world, so.
Thank you. Uh next question is from Haakon Amundsen. He has two questions. I believe you have answered part of it but I can also so you can complete with the the previous answers.On the win strategy could you give a little more update with respect to both principle power and the farm ownership operation? It's the first question and the second question is with your current market outlook do you expect to reduce your capacity further beyond the current NOK 1 billion cost reduction plan?
Okay. I can start with offshore wind. First, I think PPI continue progressing. As I think, reported early in the year, they completed installation of this 8 MW turbine, which is the largest being implemented in north of Portugal. They are progressing well. Recently, they have another some capital influx from a Japanese, important Japanese, you know, electricity company. Which is good. That opens another avenue for them and for us consequently. We're still working very closely with EDPR, and EDPR is actually together, Engie, one of the largest offshore floating winds. Then we have a very tight and nice partnership with them and going to more projects.
That's actually what generated our ownership and projects. That's certainly we are there, not because we want to be a electricity company or a developer. Is because we believe we can capture some value, some real good value, and I'm sure you're gonna hear more from that in the future. Also because we can de-risk those projects for them, and we can also guarantee our supplier role for that project, both on engineering, front-end and so forth. In terms of how it is developing, I think there's some similarities with oil and gas as people do. First of all, what people do is to do front end.
After doing front end, we need data for the front end, usually, like we did in Korea recently, it was a nice achievement. We put a laser buoy so we can measure the wind, that's another similarity to oil and gas is the more wind you have, every percent more wind will affect your NPV. We have our models that I think is quite good 'cause based on knowledge of technology as well as the knowledge of the wind itself. We also ties very well with our digitalization. I think it's progressing quite well, and I'm actually excited about this and pleased. I'm sure you're gonna hear more about that in the future. The second question was about reducing costs further.
I think since that, since 2014, we proved that we can reduce costs quickly, and we proved that again now. We have a backlog to execute. We have a very skillful and trained workforce that has proven to deliver. We have the best delivery of this company ever had the last few years, so I'm very proud of what we're doing. Again, one important point about the package in Norway is not only about the backlog. It's also very welcome and needed, but it's also the fact that we're gonna protect our execution muscle, which largely located in Norway, supporting especially on the engineering side. Planning, project management is located in Norway and supports the international locations.
Of course, that had also an impact of people being put on temporary leave and so forth. The nice thing about having this workforce now working on those new projects is the fact that, one, we're gonna have a muscle to execute projects in international markets, offshore market when they come back, and they will. Also, to help us in this transition because this will be the execution muscle that will also develop the offshore float wind and the carbon capture. That's where we take our knowledge and so on. I think that's my comment on that. We have no plans and, we're gonna take measures if required.
Thank you, Luis. We have two questions from Vlad Sergievskii. The first one, you're guiding revenues in second half of 2020 to be broadly stable at the Q2 levels, while margins declining by roughly 1 percentage point versus Q2 level despite full impact from cost savings. What is driving this sequential margin decline in the second half? That's the first question. The second question, are you able to roughly quantify the positive impact from government furlough schemes around the world on your Q2 financials?
Okay, thank you, Vlad, for good questions. Margin guidance for 2020, as we said, it's still challenging to provide specific guidance at this stage given the quite high market uncertainty, also volatility in particular outside the Norwegian continental shelf. Having said that, we, as you say, we saw significant impact of the cost reduction measures in the Q2. At this stage, we wanted to be conservative and guide them around year-to-date levels for the remainder of the year. If we, you know, continue to deliver our projects flawlessly and with a continued low level of fixed costs.
Second part of the question, impact of the furlough, and temporary layoff programs around the world, for us, mainly in the UK and in Norway in the Q2. That's included in our cost reduction program of the NOK 1 billion, which is then we commented on how much was impacted then in the Q2. We will not guide on the specific amount related to the furlough or temporary layoff programs.
Thank you, Ole Martin. Next question is from Fredrik Lunde. Do you think it is realistic to achieve growth in 2021? If so, where would you expect margin to trend? Up, down, or flat?
I think we had a similar question from Amy. You know, to talk about growth when we are just exiting, you know, the most disrupted quarter ever in the industry when oil price was negative, I guess, is a bit too ambitious in my view. As I said, we are very well positioned for the projects in Norway, and I also think we're very well positioned for the renewables growth, and I mentioned a few contracts today. In terms of margins, I mean, I would never guide on the next year margins, so, I won't start doing that now. Certainly, challenging times and there'll be strong competition, there's no question.
I like, what I like about the orders we just got this quarter is that they are repeat orders in terms of technology and engineering, so it means that we won't require a lot of investments on that. That should reflect on better margins on the subsea project we just won comparing to the ones we won through the last cycle.
I don't know, on Luis's comment, it's too early to provide guidance at the moment. If the market continues to improve, in particular outside the Norwegian Continental Shelf, and we see a higher level of approached sanctioning in the second half of the year and into 2020, and we continue to have a low level of fixed cost, that should provide a good foundation for higher margins in 2021.
Thank you. Next question is from Sahar Islam. Hi, can you talk about the competitive landscape for the upcoming tendering pipeline? Have you seen more pricing pressure? The second part, what should we expect for special items in the second half of the year, and is this excluded from the EBITDA guidance?
I'll start with the special items, and then Luis give the comment on the tendering pipeline. We had a high level of special items in the first half of the year related to our restructuring programs. I expect now that we will see a very low level of special items into second half of the year. As you said, that our EBITA margin guiding is excluding special items.
In terms of tendering, I think I give a precise number. We are over NOK 40 billion right now, and that again is good to recognize this is not the whole pipeline of projects. This is a snapshot in what we are attending right now. That's what we are giving price for clients or negotiate directly if they alliance and so on. So it's still solid there. Again, I also said that it's not for international projects, it's fair to say that a lot has slipped between 12 and 18 months to in the beginning of the year, after we saw the massive oversupply in the market that has been reduced, but still some there. I think that we have to be cautious here and wait for the response of the oil price as well as demand.
Thank you. We have the final questions from James Thompson at JP Morgan. The first question, you have outlined a number of potential approaches in Norway benefiting from the tax changes. After the initial wave of announcements, do you see more in 2020, or is the majority of the list you provided likely to progress in 2021? Please, can you talk about whether or not you are facing any recent logistical issues in Brazil, given the later appearance of the virus in country?
Okay, I'll take the first one. I think the list we have there, and you probably notice that even the list with Askeladd was not included because that was taken straight from one of the reports out there. I think those projects will be all be sanctioned. They have to be sanctioned between 2000, before 2022, to be able to capture these significant tax advantages in incentives. I would expect all this to be awarded actually in the next three years. I mentioned a few important ones like NOAKA. This is one that we are extremely excited about, because we've been working that development for both, doing studies for both operators in the north, Equinor and south Aker BP.
We know that we have a successful track record with Aker BP in the alliances, both subsea alliance as well as the platform alliance together with Kværner and Aker BP. I think we are very well positioned, considering what is the layout of the field. Aker BP yesterday also mentioned that they expect that field to be the new model, how to execute projects, not only about alliance, but also about digitalization. I have to say that our ix3 software house has been working very closely with front end and digitalizing NOAKA from the front end study. We're very excited about that to prove that we can do fields even more cost effective than the rest of the world.
Yeah, that's, so we expect those products to be awarded and to take our fair share of the list going forward. We expect more in 2021 and 2022. I guess the second question was about, remind again?
Logistics.
Okay, about Brazil. Actually, I'm actually extremely impressed what we managed to do across the globe with the logistics. Our supply chain people had a fantastic performance. We maintained, the same way we maintained contact with our clients, our supply chain people had the direct contact with all key suppliers, and maintain absolutely contact on that. We didn't see as much impact as we thought. We saw some impact in the beginning, not in Brazil, but you know, Brazil, also, we also import from all locations, valves from Italy and so on. That was what impact a little bit, we did have quite a lot of buffer. You know, we had some things ongoing stock, we managed to deliver to the clients. I'm extremely proud what we saw.
We deliver even subsea trees in China in the middle of the pandemic, where people have to be in quarantine. That's why I said I'm so proud about the workforce. We had people who are, you know, in some of these countries for over 40 days because you could not get someone in before quarantine. These people really came through to the company and to the clients. We delivered a very good performance in our SLS business, which is actually quite resilient. I'm very proud, and I think we are managing well.
Thank you. That was the final question. Thank you to everyone listening in and have a good summer.
Thank you. Before we close, I'd like to thank Ole Martin for his last quarter for us here and wish him good luck on his new ventures. Thank you very much for his service.