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    Saipem Losses Grow, Business on Track

Summary

As the Italian contractor continues to restructure, its first half results included more impairments and lower revenues; exceptional items wiped out any profit.

by: William Powell

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Natural Gas & LNG News, World, Corporate, Exploration & Production, Financials, Contracts and tenders

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Saipem Losses Grow, Business on Track

Italian engineering firm Saipem reported July 25 a first half 2018 net loss of €323mn ($425mn), three times more than it lost in the same period of last year (€110mn). Profit was reduced by write-downs as well as €51mn relating to some litigations pending for a long time on projects already completed and reorganisation expenses of €22mn.

Adjusted net profit amounted to €6mn, down from €92mn in the first half of 2017, as it recorded a significant loss from an equity accounted affiliate, deriving from the worsening of a contract under execution by a jointly-controlled company.

But it said that the operational performance, particularly in the offshore engineering and construction (E&C) segment, was strong and there was a good pipeline of business following "significant awards" in the second quarter.

These include an offshore contract from Qatar's Barzan Gas Company in the Middle East, involving engineering, procurement, construction and installation; and one from US major ConocoPhillips for decommissioning the topsides and jackets on the Lincolnshire Offshore Gas Gathering System in the UK North Sea.

The major onshore contract in oil and gas was for the engineering, procurement, construction and commissioning of the Nong Fab LNG import terminal in Thailand, for state PTT.

Adjusted revenues in the first half of 2018 amounted to €3.839bn, down by 16.4% from 1H 2017, owing to a contraction in the offshore and onshore engineering sectors and in the offshore drilling sector. Adjusted earnings before interest, depreciation and amortisation in 1H 2018 amounted to €483mn, down from last year's €524mn in 1H 2017): this reduction is attributable mainly to fewer contracts for the fleet in the offshore drilling sector.

Saipem CEO Stefano Cao said: “In the first half of 2018, Saipem achieved a solid operational performance which allowed it to obtain a good Group margin in line with the guidance. We recorded a substantial volume of new contracts in all business sectors, especially in Offshore E&C and Onshore E&C, in which we are achieving a balance between oil and non oil-price related projects, as well as the penetration of new geographical areas. We expect that commercial activity will maintain this momentum also in the second half of the year."

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