Energy service firm Petrofac announced today it would be taking “additional measures” to “right-size” the business and reduce its costs.
The London-listed firm said the steps would deliver cost savings of £185 million next year, an increase of £37m on its earlier forecast.
It is understood Petrofac will reduce its headcount further, but job cuts will be focused primarily on the firm’s engineering and construction business in the Middle East.
Petrofac chief executive Ayman Asfari said the Covid-19 pandemic and oil price collapse had had a “material impact” on the industry.
But Petrofac took decisive action to protect its balance sheet, said Mr Asfari, who will be replaced by Sami Iskander on January 1.
Earlier this year, Petrofac said it would reduce its headcount by 20% and put 200 north-east staff members on furlough in response to the Covid-19 outbreak.
Salaries for Petrofac’s board members, senior management and “most employees” were to be pruned by 10-15%, with “non-staff overhead costs” slashed by up to a quarter.
Mr Asfari said the near-term economic outlook remained “unclear”, with clients delaying awards and adopting tough commercial positions.
Management expects to report lower revenues of about £3.6 billion for the full year, down from £4bn in 2019. Profitability will be “materially lower” than in 2019.
He said: “In this environment, our strategic priorities are clear. We are focused on conserving cash, cutting costs and rebuilding backlog, while delivering operational excellence.
“In the very near term, we are taking additional measures to reduce costs further in 2021 while preserving our core capability.
“These measures – together with a strong bidding pipeline, our long-established position in attractive markets, our track record for delivery and a sharp focus on competitiveness – will position us well for opportunities when the market recovers.”
Recommended for you
