Italy's Saipem Reports Lower 1H Profit, Cuts Guidance
Italian oilfield services company Saipem reported July 25 a 13% drop in revenue in the first half of this year, to €4.59bn ($5.35bn) compared with the same period last year as the industry has contracted further.
The market in which Saipem operates is still challenging, particularly in the offshore sectors. Awards of new contracts were limited in the second quarter, and despite good visibility in the short term, the contribution in 2017 will be limited. Hence, the revenue guidance for 2017 shall move from €10bn to around €9.5bn, it said. "However, good operating performance, particularly in the Offshore E&C sector, will enable the company to keep the earnings before interest, tax, depreciation and amortisation guidance (Ebitda) unchanged."
Ebitda was €524mn, down from €669mn in the first half of 2016, with decreases in offshore drilling, owing to fewer contractual commitments; onshore drilling, owing to less business in South America; and in offshore engineering and construction.
New contracts were also lower, with €2.088bn awarded, compared with €3.328bn in the first half of 2016.
Adjusted net profit for the first half of 2017 amounted to €92mn, compared to €140mn in the first half of 2016. Reported net profit amounted to negative €110mn (€53mn in the first half of 2016), which, unlike adjusted net profit, includes: write-down of the semi-submersible rig Scarabeo 5 and associated inventory as the future use of the vessel looks lower, tax dispute settlements and reorganisation expenses.
In the first half of 2017, Saipem was awarded contracts amounting to €2.088bn (€3.328bn in the first half of 2016). The biggest of these were from ExxonMobil, for the Liza oilfield off Guyana; from BP, for the decommissioning of topsides and jackets of the Miller platform in the UK North Sea; and from Saudi Aramco, for the development of fields in Marjan, Zuluf, Berri, Hasbah, and Safaniya in the region of the Arabian Gulf.
Saipem CEO Stefano Cao said Saipem’s performance was "solid from both an operational and management point of view. The rationalisation and strengthening of the newly implemented organisational model continued and should lead to greater efficiency and effectiveness, as well as to a further reduction in operational costs. With these actions Saipem will be better positioned to meet the market upturn. Despite the persistence of a difficult market context, the company has good visibility for significant order acquisitions in the near future."
William Powell