Italy’s Saipem has announced its first quarter 2015 results according to which the company’s net profit was €77 million ($83.4 million) in comparison with €61 million ($66.1 million) in the first quarter of 2014.
Revenues amounted to €3 billion, an increase of 4.5% on the first quarter of 2014. According to Saipem, this was driven primarily by improvements in E&C Offshore and the Drilling segment, which were supported by good offshore fleet utilization and the appreciation of the USD.
EBIT for the quarter was €159 million, 25% higher than in the first quarter of 2014. The improvement in profitability was driven by the E&C business, which showed a lower overall impact from legacy projects and a positive initial contribution from newly awarded contracts, which will ramp up over the coming quarters, the company said. In addition, Saipem also saw a steady contribution from Drilling, where it is currently seeing a limited impact of daily rate reductions on its ongoing commitments.
According to the company, capital expenditure in the first quarter of 2015 amounted to €150 million in comparison to €204 million in the first quarter of 2014.
Outlook for 2015
Saipem says it expects to achieve revenues of between €12 billion and €13 billion. The company further adds that this range reflects the uncertainties related to the South Stream contract, as the client is still to provide indications as to the future of this project. To remind, Russia’s President Vladimir Putin said in December 2014 that Russia decided not to proceed with the construction of South Stream pipeline. Saipem was supposed to perform a large part of the South Stream pipeline work in the Black Sea.
EBIT is forecast at between €500 million and €700 million, while net profit is expected to be between €200 million and €300 million. Investments will amount to €650 million, slightly lower than previous long-term indications, adopting measures to improve efficiency and curb net debt.
Umberto Vergine, Saipem CEO, commented: “During the first quarter of 2015, despite the negative market environment caused by lower oil prices, Saipem continued its recovery process and its operating results confirm an improving trend. The strategy put in place over the past years is based on the strength of the drilling business, on the effort to complete legacy and loss making projects as well as possible, and on ensuring a positive contribution from new projects awarded in the context of a more solid and disciplined commercial policy.
Largely as a result of the projects awarded in 2014, Saipem can count on a strong and diverse backlog in excess of €21 billion which highlights the trust that the company has been afforded by its clients, and which provides it with a strong market position in the context of a significant downturn.
“Saipem’s recovery process is yet to be completed. At the same time, new challenges have arisen in the sector, in particular slowing client capex as a result of the current oil-price environment. However I am confident that Saipem has created a solid basis to enable it to complete its recovery process and return to historic levels of profitability.”