Petrofac Sees Fall in Revenue After Probe Hit 2019

Muvija M and Shanima A
Tuesday, February 25, 2020

Oilfield services provider Petrofac reported a 16.7% drop in core profit for 2019 on Tuesday and reiterated forecasts of a decline in revenue this year as it recovers from a hit to orders in Saudi Arabia and Iraq last year.

Petrofac officials said last June that the company had lost out on $10 billion worth of contracts globally due to a probe by Britain's Serious Fraud Office (SFO) into dealings in Saudi Arabia and Iraq that saw its former head of sales convicted of bribery a year ago.

It said it was still cooperating with the SFO but reiterated neither the company nor any of its current employees or officials had been accused and that it was focussed on bringing the matter to a close as fast as possible.

"We continue to expect a decrease in group revenue in 2020 reflecting low new order intake in recent years," the UK-based firm said.

"We expect 2020 to be a year of transition," it said, adding that while it was encouraged by the market outlook and recent awards and opportunities.

Related: Petrofac Lands Huge Offshore Deal with ADNOC

Petrofac's shares fell more than 18% in 2019 as its main Engineering & Construction arm - which brings in 70% of revenues - saw a similar drop in net profit. It said on Tuesday it expected a 5.0% to 5.75% decline in the unit's net profit margins in 2020.

The company, which designs, builds, operates and maintains oil and gas facilities said earnings before interest, tax, depreciation and amortization(EBITDA) fell to $559 million for the 12 months ended Dec. 31 from $671 million a year earlier.

Its order backlog shrunk $7.4 billion at the end of last year from $9.6 billion at the end of 2018.

Petrofac has been refocusing on its core business of manufacturing and designing equipment and storage facilities for oil and gas companies after a tough period when its upstream investments turned soured following the 2015 collapse in oil prices.

The company said the sale of its upstream Mexico portfolio was on track to complete by mid-2020. 

(Reporting by Muvija M and Shanima A in Bengaluru; editing by Patrick Graham)

Categories: Energy Engineering Industry News

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