Oil services giant Saipem take writedowns totaling 929 million euros (about 8.4 billion) due to a deteriorating market and plans to carry out a cost savings program of 1.3 billion euros in the period from 2015 to 2017.
It appears from the report for the second quarter of 2015 presented Tuesday evening.
Saipem will include scratching five ships and expects that the measures will lead to a workforce reduction of 8,800 people.
– Earnings for the second quarter of 2015 reflect a market that is highly deteriorated. The further decline in oil prices has led to a larger disturbance, are unlikely to be reversed in the short to medium term, and that has resulted in customers taking an increasingly rigid approach in operational and commercial management of contracts, says Stefano Cao in a comment.
Saipem has more than 40,000 employees worldwide, and has been present in Norway since 1990. The first major contract was signed with Statoil to develop the Kristin field in 2003. The company’s current hovedkkontor is Sola, not far from Stavanger’s busy international airport, the company said on its website.
– Review of all processes
Cao adds that in such a market scenario, it is necessary for Saipem to respond more effectively to customers’ new requirements.
We have therefore launched a thorough review of the entire company, which involves rationalization of assets and review of all processes, and which will generate overall savings of 1.3 billion euros between 2015 and 2017, he continued.
Saipem believes that this will enable the company to strengthen competitiveness, restore profitability and create value, to build on its competitive advantage.
The company points out that in the context of a falling oil price trend, which shows no sign of reversing, continuing prospects for oil industry to deteriorate.
“Clients are focused on cost reduction, resulting in a more rigid approach to negotiations, constant pressure on the supply chain margins, delays in new contract awards, and in some cases the cancellation of already approved projects, “the statement said.
Reduces operation in some countries
Saipem shows the cost program of 1.3 billion euros in the period from 2015 to 2017, involves a rationalization of its asset portfolio to focus on areas and businesses with high value. It appears that geographically, so the operation will in some countries, such as Canada and Brazil, will be reduced.
The company will scrape five ships, which are not profitable in today’s market. Furthermore, it appears that a review of the organization and processes of the company continued to increase speed and efficiency of operations.
These measures are expected to provide a workforce reduction of 8,800 people between 2015 and 2017, mainly due to the completion of several large projects and rationalization of its business and geographical presence.
The plan also involves a review of Saipem’s investment plans, with effects on operating investments from 2015. 2015 is now projected investments to be below 600 million euros, against previously around 650 million euros.
Printer down
Saipem stated that they would provide more information related to the restructuring program in a strategic update before the announcement of the figures for the third quarter.
In the context of market conditions and the actions described above have Saipem made writedowns totaling 929 million euros, which will affect the results and guidance for the full year.
Write-downs in net current assets totaled 718 million euros, mainly due to less flexibility in negotiating positions for change orders and claims from customers. In addition, reference is made to the impairment of overdue receivables related to operations in Venezuela.
In addition, reference is made to additional provisions for 211 million euros related to the sale of ships that can not be spent on projects in the order book, and reducing utilization of logistic bases affected by customers’ new plans or cancellation of projects.
Deficit
Saipem received in the second quarter 2015 revenue of 2.35 billion euros, against 3.08 billion euros in the second quarter of 2014. Beforehand, revenues for the quarter expected to 2.93 billion, according to Bloomberg News estimates.
Ebitda was minus 548 million euros in the quarter (352), while operating profit was minus 949 million euros (166).
In the context of market development informs Saipem that the result for 2015 will be affected by South Stream cancellation and write-downs in the second quarter.
The company now guiding revenue in 2015 12 billion euros, against previously 12-13 billion. Adjusted operating profit is estimated to be around minus 250 million euros and reported operating profit to around minus 450 million euros. Reported net profit is expected to minus 800 million euros.
Furthermore guides investments for 2015 to be below 600 million euros, while net debt at year end is expected to be below five billion euros, excluding currency effects.
The company received new contracts for 1.1 billion euros in the quarter, while the order backlog as of the quarter was 19.0 billion euros, of which about 5.3 billion is for 2015.
It appears that the backlog include effects of cancellation South Stream contract for 1.232 million euros and Statoil the suspension of “Scarabeo 5″ -riggkontrakten 24 million euros.
ØT, finans@tdn.no
TDN Finans, + 47 22 00 11 55
No comments:
Post a Comment