Saipem sticks to 2016 guidance as first quarter profit drops

Italian oil and gas industry contractor Saipem has reported a lower profit for the first quarter of 2016, but kept its full-year guidance. 

Saipem posted a net profit of 61 million euros, versus 77 million euros in the first quarter of 2015.

Furthermore, the company reported revenues of €2.84 billion for the first quarter of 2016, a 6% drop compared to €3.02 billion in the same period last year.

Stefano Cao, Saipem CEO, commented: “A robust performance in the offshore division, combined with improved profitability in the E&C onshore business, offset the deterioration in drilling.”

During the quarter, Saipem’s investments dropped considerably totalling €45 million, compared to €150 million in the first quarter of 2015, and included:

– €17 million in the Offshore Engineering & Construction sector, relating mainly to the maintenance and upgrading of the existing asset base;

– €1 million in the Onshore Engineering & Construction sector, relating to the purchase of equipment and the maintenance of existing assets;

– €12 million in the Offshore Drilling sector, mainly relating to class works for the semi-submersible drilling rig Scarabeo 6 and the jack-up Perro Negro 5, in addition to the maintenance and upgrading of other assets;

– €15 million in the Onshore Drilling sector, relating to the upgrade of two rigs due to start operations in Kuwait in connection with two contracts already in the backlog, in addition to the upgrade of other assets.

Guidance confirmed

The Italian company confirmed its guidance for 2016 announced to the market in the third quarter of 2015.

Saipem confirmed its forecast for revenues that amounts to >€11 billion. Net profit is expected to be around €300 million, benefiting from a reduced cost of debt due to the recently concluded share capital increase and debt financing operation, said the company.

Furthermore, Saipem said, the company’s capital expenditure was expected to be around €500 million, down 10% compared to the figure for 2015, contributing to positive cash generation which would reduce debt to below €1,5 billion by year-end 2016.

Cao also said: “We are pursuing important and visible near-term project opportunities and have made good progress on our Fit for the Future programme, where we have identified €200 million of additional savings and raised our overall target to €1.7 billion by to 2017.”

Offshore Energy Today Staff