Friday, June 5, 2020

Saipem Confirms Profit Guidance

Posted by October 24, 2017

Italian oil services group Saipem swung back to profit in the third quarter despite an industry slowdown, flagging more orders on the way and confirming profit guidance.
Its shares were up almost 10 percent at 1133 GMT while the oil and gas sector across Europe was up 0.5 percent.
Oil service companies have been struggling to fill order books as oil majors defer projects and cut billions of dollars in costs to offset low crude prices.
Saipem Chief Executive Stefano Cao told analysts the market outlook remained challenging with majors still not stepping up spending or accelerating final investment decisions.
"The expectations are that capex by oil companies should show signs of new increases early next year," he said in a call on results.
To counter the downturn, some companies have turned to partnerships or mergers, including Saipem rival Technip which last year merged with U.S.-based FMC Technologies (FTI).
"We are closely monitoring consolidation," Cao said. He said the group was preparing for "possible portfolio activities" but ruled out a breakup of the group's assets.
Saipem, jointly controlled by oil major Eni and state lender CDP, posted a third-quarter net profit of 53 million euros ($62 million) following a loss of 157 million in the previous three months.
Analysts at Kepler Cheuvreux said the company's margin was better than forecast and cash flow generation was sound.
"This Q3 report is a good set of earnings," it said.
While Saipem stuck to its guidance for yearly core earnings of around 1 billion euros and an adjusted net profit of about 200 million, it reduced its debt target for the year to 1.3 billion euros from 1.4 billion.
"I am confident of further material contract awards in coming months," Cao said.
Last week Saipem signed a strategic cooperation agreement with Russia's Rosneft, and Russian gas producer Novatek (NVTK.ME) said Saipem had been awarded a contract on the Arctic LNG 2 project.
Asked about the arbitration process under way with Gazprom over a dispute involving the South Stream gas pipeline project, Cao said he expected a decision towards the end of next year.
But he added he was open to a compromise in the meantime, adding improving relations with Russia were lending a hand.

In 2015 Gazprom scrapped a contract with Saipem to build the first line of the South Stream project that would have run beneath the Black Sea. Saipem is seeking damages of 678 million euros.

Reporting by Stephen Jewkes 

Related News