Saipem lowers its forecast for 2026 due to additional Gulf costs and denting share prices
Saipem's 2026 core earning forecast was cut on Tuesday. The Italian oil and gas contractor saw its shares fall by more than 7% as it said that disruption in the Gulf caused extra costs and logistical difficulties. Oil and gas producers have been forced to be more cautious due to the repeated?Iran War flare-ups. This has delayed tenders for repair work that Saipem, and other contractors had expected.
Saipem expects to earn adjusted earnings before taxes, depreciation, and amortization (EBITDA), which was previously estimated at EUR1.9 billion, this year. This is up from an earlier EUR1.9 billion estimate.
At 1025 GMT, shares of Milan-based Saipem fell 7.9% compared to a flat blue chip Italian index.
Saipem’s CEO told analysts in a conference call that the intermittent closure of the Strait?Hormuz was making it harder for the company to deliver large equipment, particularly to clients located in the Gulf.
Alessandro Puliti said, "We had to pay higher rates for barges, insurance, and temporary storage, as well as expenses for temporary repatriation for expat workers." He added that Saipem was waiting for the right time.
Saipem - which counts Saudi Aramco, QatarEnergy, and Abu Dhabi's ADNOC as its customers - spent about EUR70 million during the first half of the year to improve security for their personnel in the Gulf, and overcome logistical problems due to the conflict.
It said that it expects to incur similar costs in the second-half, but was in discussions with customers about recovering some of them next year.
Saipem stated that the recent sale of its shallow water drilling business had also affected the EBITDA estimates for the entire year.
"We're taking a cautious stance this year," Puliti added, adding that the group planned on crossing the strait about 10?times during the second half of the year to finish works in Qatar. Baker Hughes, a U.S. rival, said on Monday that it expects annual global spending for?oil-and-gas producers to be modestly down this year. The company says growth in Latin America, offshore Africa, and onshore North America will be offset by lower expenditure in Europe and Middle East.
Saipem has confirmed its previous EUR1 billion operating cash flow forecast for the full year and said it expects order volumes to be stronger this year than last, after winning important contracts in Africa. Indonesia and Italy.
Saipem reported that adjusted EBITDA dropped nearly 3% to EUR402 millions in the second quarter, falling short of an LSEG analyst consensus estimate of EUR464million.
(source: Reuters)
