Petrofac today said it expects to record $410million in net profit for 2016.
In its pre-closing update, the service firm said moves like cutting 25% of its headcount this year and improved operational efficiency positioned it to deliver “positive results”.
Ayman Asfari, Petrofac’s group chief executive, said:“We are on track to deliver positive results in 2016 in line with guidance reflecting record revenues, solid operational performance across all of our businesses and the delivery of significant cost savings. We also continue to make good progress on our strategy to refocus on our core strengths and reduce capital intensity. During the year we exited the Berantai Risk Service Contract in Malaysia and Ticleni Production Enhancement Contract in Romania.
“2016 has been a challenging year for the industry. The deferral and cancellation of project tenders has contributed to significantly reduced order intake in our lump-sum business year to date. Order intake in our reimbursable business has been more resilient, which will partially offset the anticipated reduction in EPC revenues in 2017 from record levels this year. Our existing backlog continues to provide excellent visibility for Group revenue next year and our bidding activity has increased during the last quarter of the year. We remain very focused on maintaining our cost competitiveness and discipline in a competitive market, and are well-positioned for a recovery in our core markets.”
The firm said it had an order backlog of $14.5billion. It also clocked 200 million man hours on 18 projects across its portfolio.
Despite the drop in oil, the UKCS is still fueling the firm’s engineering and production services business, according to the update.
It read: “Our reimbursable business continues to perform in line with expectations and will contribute an increasing proportion of earnings in 2016 and 2017. We have secured awards and extensions worth approximately $1.1billion year to date, predominantly in the UK North Sea and Iraq, and we are pursuing a good pipeline of opportunities in the UK and internationally.”
Petrofac’s net debt is expected to be around $0.9billion at 31 December 2016 (30 June 2016: $0.9bn) “primarily reflecting lower than expected new order intake”.
At the beginning of the year, the firm cut more than 100 jobs. Read more here.
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