Petrofac flags stronger order intake even as annual revenue take a Covid hit

British oil services company Petrofac Ltd projected  on Thursday its revenue for the current financial year to be around US $3 billion, compared with a revenue of about US $4.1 billion last year, as Covid-19 disruptions continue to impact its engineering and construction (E&C) project schedules and costs.

The London listed firm said in a pre-close trading update for the year ending December 31 that the group’s net profit was broadly in line with market expectations for 2021, supported by tax provision releases of US $17 million in the first half and approximately $35 million in the second half of the year.

Its new order intake of US $2 billion in the year to date also marked an increase from US $0.5 billion at the half-year mark, with EPS on track to deliver a book-to-bill of 1.0x for the full year, the company said.

“Earlier this year I set out a plan to rebalance, reshape and rebuild Petrofac. The recent refinancing has provided a long-term, stable capital structure for the business and largely completes the work to rebalance the Group,” said Sami Iskander, Petrofac’s Group Chief Executive. 

“Operationally, we are making good progress in reshaping the organisation to consistently deliver to best-in-class global standards through local execution,” he said.

While its year end net debt is expected to be broadly flat versus Q3, at approximately $200 million, Petrofac is on track to deliver a cost saving target of around US $250 million by the year end. The group is also well-positioned with a pipeline of US $40 billion for award in 2022, of which US $7 billion is in new energies, the company said.

The full year E&C revenues are expected to remain at US $1.9 billion, compared to US $3.1 billion in 2020, primarily because of the reduction due to the continuing impact of Covid-19 on project progress together with low order intake in previous years. Net margins are expected to be below prior year due to unrecoverable Covid-19 related cost increases, partly mitigated by management actions to reduce costs and by tax provision releases. These tax releases are expected to contribute US $25 million to US $30 million to net profit in the year, Petrofac said.

“While challenges will persist in 2022, I remain confident about the prospects for Petrofac over the medium-term as we capitalise on our strong positions in attractive and growing markets and accelerate our progress in New Energies, where we see significant near and long-term growth in exciting areas such as offshore wind, carbon capture, waste to value and hydrogen,” Iskander said.