Business Outlook 2019
BUSINESS OUTLOOK 2019
Figure 25: Snapshot of Contractor Company Revenue Expectations for 2019 Versus 2018
Much Higher
Higher
About the same
Lower
Much lower
Source: Oil & Gas UK
Source: Oil & Gas UK Despite the increase in new investment commitments, E&P companies have retained a focus on cost discipline amidst ongoing market uncertainty. Continued pressure on companies can be seen in the ongoing decline in EBITDA 13 margins, which fell at a faster rate than revenues in 2017. EBITDA margins are a commonly used indicator of a company’s operating profitability, shown as a percentage of total revenue. However, since they do not consider exceptional costs (such as restructuring) and capital costs, they can provide a more positive outlook than the true financial position of some companies — especially capitally intense sectors such as rig contractors, which are required to purchase expensive equipment and assets.
Figure 26: Supply Chain EBITDA Margins
12%
45
Costs
EBITDA EBITDA Margin
40
10%
35
8%
30
25
6%
20
4%
15
Average EBITDA Margin
10
2%
Supply Chain Revenues (£ Billion - Nominal)
5
0%
0
2010
2011
2012
2013
2014
2015
2016
2017
Source: EY
13 Earnings before interest, tax, depreciation and amortization.
42
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