Petrofac Ltd (LON:PFC) has suspended its final dividend for last year and is slashing costs in response to the unprecedented market conditions triggered by the coronavirus (covid-19) pandemic.
It was due to pay-out US$85mln, at 25.3 cents per share. Whilst acknowledging “he importance of dividends to shareholders”, the firm said it will review dividends again once the full impact of COVID-19 and low oil prices is known.
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In the meantime, the oil services is also cutting overhead and project support costs by a minimum of US$100mln this year, and, then targeting US$200mln in 2021.
It is axing 40% of its capex budget with the aim of conserving cash and liquidity.
Pay for board members, senior management and most of employees is being cut by 10-15%, personnel headcount is reducing by 20% and Petrofac is furloughing staff in anticipation of lower activity levels.
Petrofac noted that it had some US$1.1bn of liquidity as at 2 April, it has extended a US$150mln loan previously due in March by two years and had reduced debt maturity in the next 12 months to US$275mln.
The company said it landed US$2bn of order intake in the first quarter, increasing order backlog to US$8.2bn.
Chief executive Ayman Asfari said: "We have a resilient business model, strong competitive position and a differentiated in-country value proposition that is highly valued by our clients.
“Nevertheless, we are taking swift, decisive action in response to the COVID-19 pandemic and lower oil prices to reduce costs, retain our competitiveness and preserve the strength of our balance sheet.
“These best position us to protect our business, stakeholders and the communities we serve."
Petrofac told investors that it is too early to ascertain and quantify the impact of both COVID-19 and low oil prices, therefore, it is suspending revenue and margin guidance.