20th Dec 2022 16:48
(Alliance News) - Petrofac Ltd on Tuesday said for 2023 it expected an annual loss before interest and tax, especially in engineering and construction, due to adverse commercial settlements and cost increases.
Petrofac is a London-based energy services company in oil, gas, refining, petrochemicals and renewable energy infrastructure.
Peel Hunt Analyst Alexander Paterson said the trading and outlook was worse than expected: "No new contracts have been won of any size, with only USD500 million of new order intake in engineering & consulting, which will put further downward pressure on estimates unless some substantial awards are made very soon."
Petrofac said E&C awards have been slower than expected in 2022, but it maintained a positive outlook for E&C recovery and continued growth in asset solutions.
"We expect these opportunities to provide backlog growth in 2023 and lay the foundations for a return to profitability, positive free cash flow and continued recovery thereafter," said Chief Executive Officer Sami Iskander.
The company expected an E&C Ebit loss of around USD190 million and an overall Ebit loss of USD100 million, while Peel Hunt expected an overall Ebit profit of over USD12 million.
For 2021, the firm posted an Ebit loss of USD14 million for E&C, and an overall reported operating loss of USD130 million.
Petrofac's anticipated order backlog at the end of 2022 also underperformed at USD3.3 billion, at least 30% below Peel Hunt's expectation of USD4.7 billion.
On the outlook, Peel Hunt's Paterson said further: "The outlook for new awards in E&C is described as being robust with USD1.5 billion at the preferred bidder stage but only USD900 million of 2023 revenue secured compared to our USD1.3 billion."
He noted that while the secured revenue is USD800 million, Ebit is expected to fall, against Peel Hunt's "forecast of a small increase."
Paterson added: "Net debt excluding leases was USD396 million at 15 December, reflecting the delay in receipt of certain 2022 settlements to early 2023, the lack of new awards and unrecovered cost overruns in E&C, compared to our USD346 million at year end.
"Leases were not reported but we expect them to add a further USD112 million," Paterson said.
Petrofac shares were down 3.0% to 70.15 pence each on Tuesday in London.
By Tom Budszus, Alliance News reporter
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