French oil and gas engineering group Technip reported an unexpected increase in second-quarter profits yesterday, against the trend for its sector.
It also said its outlook was improved and it expected full-year revenue of £5.53billion, compared with previous guidance of £5.27-£5.53billion, with subsea operating margins “towards 18%”, at the upper end of guidance.
Technip said second-quarter net income had risen 12.8% year-on-year to £100.5million, although revenue for the quarter was down 5% at £1.5billion.
The group’s high-growth and high-margin subsea engineering division, which supplies underwater pipelines and construction vessels, is performing better than analysts expected.
Citigroup said the subsea contribution was the key driver of the profit increase, and revenue and margins were both above expectations.
The sharp fall in oil prices from a peak of more than $147 a barrel last July has led many oil and gas companies to cut or defer their spending – particularly on exploration – and call for suppliers to lower their prices.
Technip has been less affected than rivals because its business involves large engineering projects which cannot be cancelled easily in difficult times. Nevertheless, its second-quarter order intake fell to £755million from £1.22billion a year earlier, with its backlog of work down to £5.25billion at the end of the period from £5.99billion the year before.
Technip chief executive Thierry Pilenko said that, with continued uncertainty in the global economy, clients remained prudent in the final investment decisions and focused on reducing project costs.
He added: “The combination so far this year of a recovery in oil prices, and significant deflation on equipment, construction and vessel costs are rendering projects more economical, and as a consequence our tendering activity has been increasing.
“In an environment which is still volatile Technip will stick to its strategic priorities and maintain investment in new assets and research and development.”
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