Petrofac Limited swings to full-year loss but market conditions remain
Recovery is yet to materialise despite higher oil price, an improvement in the near-term economic outlook and an increase in tendering activity in the first quarter of 2021
() said market conditions remain challenging after swinging to a full-year loss.
This is despite a recovery in the oil price, an improvement in the near-term economic outlook and an increase in tendering activity in the first quarter of 2021, the oilfield services provider said.
Clients are continuing to adopt tough commercial positions and delays in awards remain a risk, it warned.
To cope, Petrofac is focused on rebuilding its order book and currently has US$3bn scheduled for execution in 2021, comprising US$2.2bn in engineering and construction (E&C) and US$800mln in engineering and production services (EPS).
Recovery is expected to pick up at the end of the year with a return to pre-Coronavirus (COVID-19) pandemic capital expenditure levels by 2023.
The group has a tendering pipeline of around US$20bn of opportunities scheduled for award by the end of 2021 and US$34bn in 2022.
It is also planning to cut costs but invest in digitalisation, automation and process efficiency, which should “modestly” lift E&C and EPS net margins this year.
In the year to 31 December, revenue tumbled 26% to US$4bn while last year’s net profit of US$73mln turned into a US$180mln loss after the COVID-19 pandemic battered the oil and gas sector.
Shares shed 4% to 125.48p on Tuesday morning.
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