Saipem withdraws 2020 guidance over deteriorating market conditions

Italian oilfield contractor Saipem has decided to withdraw its 2020 guidance, reserving the right to issue a new one should the market conditions improve.

After a meeting of the Saipem board of directors, chaired by Francesco Caio, the company on Wednesday opted to withdraw its previously announced guidance for the year.

Namely, the company in late February stated that its 2020 guidance for revenues was around €10 billion ($10.9 billion) and €600 million ($652.5 million) for capital expenditures.

The board analysed the evolution of the effects of the COVID-19 pandemic on the global economic scenario and Saipem’s activities.

According to Saipem, the company’s operating activities have until now progressed in line with the four-year industrial plan approved on 25 February 2020 despite the concurrent decrease in oil price, also supported by significant operative initiatives adopted by the company to better manage the COVID-19 emergency and the business continuity with the utmost respect for people’s health and safety

But the Italian company also noted that the intensification of the uncertainty caused by the development of the pandemic might cause a sharp demand contraction and consequently a delay of some projects.

As a result, Saipem withdrew its 2020 guidance reserving the right to issue new guidance should the market conditions become more stable.

This decision came as a result of the effects that this deteriorated scenario was having on the ability to estimate the crisis impacts on the commercial and operating activities of Saipem and consequently on its asset value, economic, and financial results.

Although the guidance is no longer valid, it is important to note that the firm’s backlog and the balance sheet are still very solid, and Saipem further stated that its available liquidity was in line with the financial planning and was appropriate to support operational needs.

With regards to Saipem’s financial debt, there are no significant maturities in 2020 and 2021, following the early redemption of €500 million ($543.7 million) bond maturing in 2021.

The board will convene again on 22 April 2020 to analyse the results as of 31 March 2020, and the shareholders’ meeting will take place on 29 April 2020.

Saipem has already taken steps to mitigate the effects of the COVID-19 pandemic by having its employees stay at home. The company also cancelled and reduced to minimum all missions to and from the coronavirus risk areas abroad.