11th Aug 2020 09:53
(Alliance News) - Oilfield services provider Petrofac Ltd on Tuesday said first half earnings was materially hurt by the new coronavirus outbreak and the sharp fall in oil and gas prices, but cost cuts contained the damage.
"Our first half results reflect the deterioration in market conditions triggered by the Covid-19 pandemic and subsequent decline in oil prices. In response, we are doing everything in our control to protect both the health and well-being of our people, suppliers and communities, as well as the long-term health of the business.
"These swift and decisive actions are structurally reducing costs, conserving cash and maintaining our competitiveness. I am confident that this strategy and our actions best position Petrofac for the recovery when it occurs."
For the six months to June 30, Petrofac swung to a pretax loss of USD48 million from USD193 million profit recorded a year ago. Revenue fell 26% to USD2.10 billion from USD2.82 billion.
First-half revenue in Engineering & Construction division fell 28%, caused by Covid-19 related project delays. Revenue in Engineering & Production Services dipped just 5%, however, reflecting a decline in operations activity as offshore crews were reduced to minimum levels in order to meet social distancing measures and training centres were temporarily closed.
Integrated Energy Services unit revenue decreased by 38%, primarily due to the decline in oil prices.
Oil prices, which were trading around USD70 a barrel at the start of 2020, fell sharply during the first half due to a drop in demand as a result of the virus outbreak. Brent was trading was trading at USD45.20 a barrel on Tuesday morning.
Petrofac's first half earnings before interest, tax, depreciation and amortisation fell 58% year-on-year to USD129 million from USD305 million, reflecting lower revenue and margins in all operating segments.
The company's order backlog decreased 16% to USD6.2 billion at June 30 from USD7.4 billion at December 31 due to low new order intake and progress delivered on the existing project portfolio.
The company said it remains on track to reduce overhead and project support costs by at least USD125 million in 2020 and by up to USD200 million in 2021.
It has decided to continue to suspend dividend payments and therefore will not pay an interim dividend in 2020 to conserve cash. In 2019, it paid 12.7 US cents per share in interim dividend
Separately, Petrofac said that it has committed to reduce its emissions to net zero by 2030. It also has set a target of 30% of women in senior roles by 2030.
Petrofac shares were up 2.1% in London on Tuesday morning at 168.70 pence.
By Tapan Panchal; [email protected]
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