Petrofac Ltd said trading and expectations for the six months to end-June are in line with guidance provided in the energy services company’s AGM statement last month.
The FTSE-250 group said its engineering and construction (E&C) division is expected to report a first-half EBIT loss of about US$35-45mln due to additional Covid-related project costs. Petrofac expects this division to make a marginal profit in the second half, subject to the outcome of the final commercial settlements, “partially offsetting” the first-half loss.
E&C continues to be negatively affected by the lingering impact of the pandemic, resulting in higher costs and some relatively unfavourable commercial settlements with clients, it said, adding that these dynamics will largely play out within the year, with a number of projects scheduled for completion over the course of the year and early 2023.
First-half revenues for E&C are expected to be around US$0.6bn.
“As previously reported, first-half financial performance has been adversely impacted by delays and cost-overruns in our small and mature existing E&C portfolio,” said chief executive Sami Iskander.
The company said the financial performance of its Asset Solutions division in the first half had been robust, with revenue expected to be about US$0.5bn. Revenue is expected to be higher in the second half, supported by strong order intake, it added.
Petrofac also highlighted a strong performance by its Integrated Energy Services (IES) division, with net production expected to be more than 500,000 barrels of oil (kbbls) in the first half, versus 210 kbbls in the year-earlier period, and on higher oil prices.
Net production in the second half is expected to increase further, with full-year guidance maintained at 3.0-3.5 kbbls per day.
“Looking forward, we expect Asset Solutions and IES to continue to deliver strong performance,” said Iskander.
“Notwithstanding the short-term challenges in the existing E&C portfolio, we continue to expect the second half of 2022 to mark an inflection point for a sustained period of growth in backlog. We have a healthy 18-month group bidding pipeline and we expect to grow the E&C backlog in 2022 and to secure significant new orders in 2023, underpinned by opportunities in the UAE and offshore wind.”
The company’s net debt was US$345mln as at 23 June and is expected to reduce in the second half.