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Thank you Mark Bell.
FT
Petrofac warns revenue slide to persist in 2020
SFO probe into oilfield services group has led to a dropoff in new orders
Petrofac, the oilfield services company under investigation by the UK’s Serious Fraud Office, has warned revenues will continue to slide in 2020 as it suffers a hangover from low orders taken in recent years.
The company last year admitted that it failed to win any new orders in Saudi Arabia and Iraq, two key markets, in the first half of 2019 following concerns from clients in those countries connected to the SFO probe, which was launched in 2017.
Petrofac said in its full-year results on Tuesday that the general outlook for the wider oilfield services market was improving but “we continue to expect a decrease in group revenue in 2020 reflecting low new order intake in recent years”.
The value of Petrofac’s backlog of work stood at $7.4bn at the end of December, versus $9.6bn a year earlier. Revenues in 2019 slid 5 per cent to $5.53bn while earnings before interest, tax, depreciation and amortisation (ebitda) dropped to $559m from $671m a year earlier, which the company blamed on a series of factors, including a different mix of projects in its key engineering and construction division, as well as pressure on margins and investments made at its engineering and production services division.
However, pre-tax profit for 2019 was higher at $192m versus $107m in 2018, as the company booked fewer one-off exceptional costs and re-measurements.
Ayman Asfari, Petrofac’s chief executive, sought on Tuesday to cast an optimistic light on the year ahead, saying the company had the opportunity to bid for $37bn worth of contracts by the end of 2020, which he described as a “year of transition”.
However, Mr Asfari also conceded that investments to maintain “market-leading execution capability”, together with “project mix and the low new order intake of recent years?.?.?.?will impact financial performance in 2020”.
On the SFO probe, the company said: “Petrofac continues to engage with the SFO and will respond to any further developments as appropriate. We are focused on bringing this matter to closure as quickly as possible and believe this is in the best interests of all stakeholders.”
The SFO confirmed its investigation against the company in May 2017 as part of a wider probe into Unaoil, a Monaco-based oil consultancy.
Analysts at RBC Capital Markets called the 2019 results “mixed”.
The FT have a piece on PFC. Can’t read the whole article but they carry the headline on reduced orders. They could of course have spun it more positively with dividend retained or similar..
SP - perplexing?
I don't understand. The dividend at the moment is at 8% and for next year. Positive results. positive net cash. 1.8 billion in facilities. Great outlook for 2020 with 2 billion $ in projects finalized and till date no charges against PFC orcany of its employees.
unbelievable sp... why are they holding it back?
WG going up doesn't make sense
Thanks for getting the results on here so early lilo. Let’s hope we see this move higher now. GLA
They are keeping the dividend for 2020 unchanged... good sign. Also a good pipeline of bidding projects and a positive outlook to growth return. Let us see.
PETROFAC LIMITED
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2019
· Solid operational performance in all our businesses
· Business performance net profit (1)(2) down 22% to US$276 million
· Reported net profit (2) of US$73 million post impairments and exceptional items
· New order intake (3) of US$3.2 billion; backlog (4) of US$7.4 billion at 31 December 2019
· Net cash of US$15 million
· Final dividend of 25.3 cents per share, maintaining total dividend at 38.0 cents per share
Year ended 31 December 2019
Year ended 31 December 2018
US$m
Business performance
Exceptional items and certain re-measurements
Reported
Business performance
Exceptional items and
certain re-measurements
Reported
Revenue
5,530
-
5,530
5,829
-
5,829
EBITDA
559
n/a
n/a
671
n/a
n/a
Net profit/(loss) (2)
276
(203)
73
353
(289)
64
Ayman Asfari, Petrofac's Group Chief Executive, commented:
"Our results for 2019 reflect solid operational performance across the business and good progress delivering our strategy.
"Best-in-class execution has delivered attractive margins in our core businesses, underpinned by an unrelenting drive to strengthen our cost competitiveness by investing in talent, local content and digital technology. Our migration to a capital light business and tight working capital management has improved cash flow, with agreed non-core divestments set to further strengthen our balance sheet and enhance returns.
"Looking forward, we expect 2020 to be a year of transition. We are encouraged by the improving market outlook, recent new awards and US$37 billion of bid opportunities scheduled for award by the end of 2020. Consequently, we are investing in maintaining our bench strength to preserve our market-leading execution capability. This investment - together with project mix and the low new order intake of recent years - will impact financial performance in 2020, but best positions us for a return to growth as we rebuild our order book."
PETROFAC LIMITED
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2019
· Solid operational performance in all our businesses
· Business performance net profit (1)(2) down 22% to US$276 million
· Reported net profit (2) of US$73 million post impairments and exceptional items
· New order intake (3) of US$3.2 billion; backlog (4) of US$7.4 billion at 31 December 2019
· Net cash of US$15 million
· Final dividend of 25.3 cents per share, maintaining total dividend at 38.0 cents per share
Year ended 31 December 2019
Year ended 31 December 2018
US$m
Business performance
Exceptional items and certain re-measurements
Reported
Business performance
Exceptional items and
certain re-measurements
Reported
Revenue
5,530
-
5,530
5,829
-
5,829
EBITDA
559
n/a
n/a
671
Results - that’ll do!!
Sure isn't Lilo-all the disgustingly uber wealthy wetting themselves this morning and running for the hills just in case they drop a few bob but interesting that the Hang Seng is down less than 2% as opposed to our overall 3.74% and the European Markets even more.
Tokyo is closed for the Emperor's Birthday-just as well perhaps.
"Not sure what to expect from PFC results tomorrow. Any opinions ?"
TheTrading statement on December 17th is proabably worth revisiting, as it wasnt so long ago really ....nothing will really have changed with regards the 2019 year end ..I doubt .
Worth looking at what they said about 2020.
Divestments and asset sales in oil were probably a good thing....the current , very poor, oil price wont help the IES part of the business.
I would like to know if there are any writedowns due on the sale of that Mexican business, as the carrying amount seemed to be higher than the sale achieved..need clarification
Probably see the results much as expected and advised in December, and any reaction will be on the guidance, statement on the year ahead IMO
I was one of those who sold on last week's contract win uplift, as a hedge against this oil/virus situation .....the share price is undervalued ...but...nothing is quite hooked in right at the moment...fears of downturn and all that
Corona Virus is not helping at all
yes this is a case of cast the hook and see what comes back. but they have been getting some small and big contracts so hoping earnings and sentiment takes a turn for the better.
I am hoping for a nice bounce in sp, an upbeat statement from the CEO re pipeline wins and i think we will start to move higher , several weeks in and the prosecution (SFO) are still fishing and will soon need to explain why they dropped case against founders of Unaoil but continuing to go after small fish.
Not sure what to expect from PFC results tomorrow. Any opinions ?
A key reason for SFO is to tackle white collar crime. However, not only must there be some degree of evidence to officially open a case against a company; one would think that if the SFO has not levelled any charges within, say, 12 months then it should be a situation of case closed. This running cases for an average of 4.5 years is ridiculous. Plays right into Shorters hands.
Alto- the one thing that always seems to predicate a DPA is a charge against the company - and no charge has been laid against PFC - cos two years in and SFO have ..."sfa" and hence are on a fishing trip and it seems it is leaks to the Guardian gets used to sling the mud and hope some sticks ( with HF managinging to decide to short the stock before news breaks), SFO really do not seem to care about holding the moral high ground in how they go about things and nor will they until such time as they are held to account. Time for Boris to drain the swamp
titteryenot thanks for input at the very beginning of sfo investigation a american trade house stated we would get a$1b fine which help plummet the sp. for me i still don't think there is any guilt this could be a foolish stance but it's mine none the less. but if i did have doubts i would say a DPA is no longer on the table as this is normally reserved for those that just crumble and hold there hands up. one thing that does annoy me is i can't seem to find any cases were sfo has been sued for the destruction of a company? which means these fishing expeditions can just go on because there is no risk for them. but i also think that the mood to anything to do with oil is very negative at the moment and will probably remain so that is were my risk point is at but if they diversify at a good pace then i don't see a problem. oil still has years to run yet but it's looking like the writing is on the wall in the end.
PC - cheers I read their website aas thier own propaganda machine but worth noting the wording.....
Per website :
"These offences relate to the making of corrupt offers....."
I am not entirely sure they have proven that they were made based on that wording.... not that that stopped them regurgitating Lufkins admission and may also explain why more than a year has passed and no date set for sentencing....... clearly he hasn't offered up any tangible evidence that they can corroborate IMHO
I beleive what they are trying to do is create a "chain of evidence" by having the former Unaoil employees convicted......
The twist here that may come back to bite them is that they have dropped charges against Unaoil founders.....(go figure - did someone have a word in their shell like?)
So lets see where the defence team go with the fact they dropped the case against Unaoil- a dismissal, a put up or shut up demand...... who knows
Suspecting it and proving it are two very different things as the SFO have been reminded embarrassingly too many times.
Wolfhound,
On the SFO site it says that Lufkin actually made payments and details the payments made through the agent......
https://www.sfo.gov.uk/2019/02/07/former-senior-executive-convicted-in-petrofac-investigation/
The SFO also named 4 senior PFC managers – George Salibi, ES Sathyanarayanan, Mani Rajapathy and Paolo Bonucci – and alleged that they acted with Lufkin.. ..and they all denied it and the company has stood by them.....but nothing further has been said on that as far as I know
" A lawyer for Salibi said he “emphatically denies any suggestion of wrongdoing. He is dismayed at the SFO’s wrongful naming of him, in circumstances where he has never been charged with any offence, nor even spoken to, let alone interviewed, by the SFO in relation to any aspect of the charge on which he is named.”
https://www.theguardian.com/business/2019/aug/04/sfo-names-four-petrofac-managers-over-multimillion-pound-bribe-scheme
As reported in the Guardian 1 yr ago ( Feb 19) , and as far as I am aware - SFO accused posthumously the deceased former president Maroun Semann in court filings im Feb 2019 at the time of Lutkin case, accusing him of taking part in scheme to award oil contracts
Per the guardian article Lufkin "admitted offering to make corrupt payments to try" to secure contracts .....
the subtely of the wording.... "offering to make' , indicates intent but not follow through...... the Unaoil case is their holy grail, fail and SFO might be looking for new jobs... if Boris does a Donald :)
thanks for the Pokerchips agree with all you say....... in regards to why PFC are singled out now that is a good question!
Got it MarkbellUK. Thanks.
PC- That’s an interesting point. my understanding is that he’s confessed but hasn’t blown the whistle on anyone else in PFC. So he is to be sentenced on that basis. If he did WB then he can’t have come forward with compelling evidence on which the SFO felt they could proceed in court.
I’m guessing a bit like everyone else. You can only go on what’s in the public domain.
I am also guessing that if unaoil are found to be guilty, on the evidence and that evidence implicated PFC then a deal may follow. Saves trying to prosecute a number of trials? DYOR though and best of luck