Italian engineering firm Saipem has suffered from a contraction in its key markets, with €500million wiped off 2017 revenue guidance.
Half year revenues for the first six months of 2017 are down 13% compared to the first half of 2017.
The company made €4,590 million in the first six months of the year compared to €5,275million for the same period last year.
The firm said it had seen market shrinkage in offshore engineering and construction (E&C), floaters and drilling sectors.
Adjusted earnings before interest, taxes, depreciation and amortization amounted to €524million, a decrease from €669milion in the first half of 2016.
The reduction in net income was put down to “decreases” in offshore and onshore drilling, reduced levels of activity in South America, as well as the reduction in E&C work.
Reported net profit amounted to -€110million due to the €44million writedown of the Scarabeo5 semi submersible, €53million of tangible assets, a €26million reorganisation and the impact of tax dispute settlements which cost €79million.
The results come just two months after Saipem went through a group reorganisation, into five main divisions.
In the H2 results, published today, the firm said the outlook for 2017 is one of a “challenging” market, “particularly in the offshore sectors”.
The half year report added: “Awards of new contracts were limited in the second quarter, and despite good visibility in the short term, the contribution in 2017 will be limoited.
“Hence, the revenue guidance for 2017 shall move from €10billion to €9.5billion.
Adjusted net profit is estimated at approximately €200million, a downgrading from the previously forecast €230milllion.
Capex for the year is estimated at less than €400million due to “reduction measures undertaken”.
Capex for the first six months of the year amounted to €147million.
Saipem awarded contract worth €2,088million in the first half of 2017, down from the €3,328million reported in the same period last year.
The backlog at June 30 was €11,717million, of which €3,777million is due to be realised in 2017.
Stefano Cao, Saipem chief executive, said: “In the first half of 2017, Saipem’s performance was solid from both an operational and management point of view.
“The rationalization and strengthening of the newly implemented organizational model continued and should lead to greater efficiency and effectiveness, as well as to a further reduction in operational costs.
“With these actions Saipem will be better positioned to meet the market upturn. Despite the persistence of a difficult market context, the company has good visibility for significant order acquisitions in the near future.”
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