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Petrofac shares lower as revenue drops

"Petrofac has reported good results that reflect solid execution and excellent progress delivering our strategy,” said Ayman Asfari, Petrofac chief executive

oil and gas operations
Petrofac shares fell 1.97% to 407.2p

Petrofac Limited (LON:PFC) shares traded lower in Thursday’s early deals as the oil services firm’s financial results confirmed a drop in revenues and business profits.

Revenue for 2018 was reported at US$5.82bn, down from US$6.39bn, while net profit came in at US$64mln - with a US$353mln business performance offsetting a US$289bn negative impact of exceptional items.

The ‘business performance’ for 2018 at US$353mln represents a 2% decline from the US$361mln tally in the preceding year, but, smaller exceptional impacts meant that Petrofac could report the positive net profit versus the US$29mln loss for 2017.

Petrofac highlighted some US$5bn of new order intake and a US$9.6bn order backlog as of December 31.

READ: JP Morgan downgrades Petrofac as shareholders band together

"Petrofac has reported good results that reflect solid execution and excellent progress delivering our strategy,” said Ayman Asfari, Petrofac chief executive.

Asfari added: "Looking forward, we are well-positioned for 2019 with good revenue visibility.

“Whilst we have a busy tendering pipeline and are well-placed on a number of bids, there is a higher degree of uncertainty in the level of awards in the near-term. We are nevertheless targeting a book to build of greater than one.”

The company announced a 38p per share full-year dividend.

Nicholas Hyett, analyst at Hargreaves Lansdown, in a note, described the financial results as a slide show whilst highlighting the Serious Fraud Office (SFO) investigation rumbles on.

Hyett said: “Full-year numbers are really a slideshow at the moment – and it’s not often you say that.

“The far more pressing issue is the SFO investigation into alleged bribery and corruption, and the effect that might be having on Petrofac’s ability to win new business.

“To be fair the order-book’s been shrinking for years, but we worry that as the SFO investigation gets closer to home, potential partners will become ever more cautious.

“We worry things could still get worse before they get better – one former employee has confessed to eleven bribery charges, but none of them are related to the Kazakhstan operations that originally sparked the SFO investigation.

“It’s worth noting that Petrofac hasn’t been charged with any offences, but that doesn’t mean the investigation isn’t already doing damage.”  

Quick facts: Petrofac Limited

Price: 407 GBX

LSE:PFC
Market: LSE
Market Cap: £1.41 billion
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