Saipem Sticks To 2017 Guidance, Sees No Recovery For Industry Yet

Saipem Warns On Profits After Falling To Q2 Loss

MILAN Feb 23 (Reuters) – Italian oil services group Saipem stuck to its guidance for the year on Thursday and said it did not see any recovery for the industry despite higher oil prices.

Saipem, jointly controlled by oil major Eni and state-lender fund FSI, reported a net loss last year of 2.1 billion euros after heavy writedowns booked to deal with the slump triggered by lower oil prices.

Since OPEC reached an agreement in November to cut production levels, crude prices have risen slightly but oil majors remain cautious.

“Our clients are still delaying projects, especially in deep water,” Saipem CEO Stefano Cao said on a call with analysts.

Oil service companies around the world are finding business tough as weak crude prices force oil majors to cut billions of dollars in costs.

“The low level of investments will persist in 2017, with the exception of North America and in part in the Middle East,” Cao said.

Confirming targets set in October, Saipem said it expected adjusted core earnings this year of around 1 billion euros while net profit should be more than 200 million euros, underpinned by work already in its backlog portfolio.

In the fourth quarter, the contractor posted an adjusted net profit of 26 million euros, short of a Thomson Reuters consensus of 57 million euros.

Saipem, which employs some 38,000 people, is a market leader in subsea engineering and construction (E&C) work including the world’s most expensive oil field, Kazakhstan’s Kashagan.

But its onshore E&C and drilling businesses remain a problem and some analysts have said it could sell assets.

“We are not studying any disposals of our units,” CFO and strategy officer Giulio Bozzini told a media call.

Bozzini said Saipem was asking for compensation of 600-700 million euros from Gazprom for cancellation of a South Stream contract in 2015.

He said he expected a decision to be made in 2018. (Reporting by Stephen Jewkes; Editing by Elaine Hardcastle)