Petrofac interims lower as margins fall; Sees lower 2020 revenue

(Sharecast News) - Oil industry engineer Petrofac reported a fall in interim core earnings due to a decline in contract margins, higher overheads and higher tax as it warned of lower revenues in 2020.
Earnings before interest, tax, depreciation and amortisation fell 9% to $305m. Petrofac said it expected full year results to be in line with guidance with revenues of around $4.5bn and net margins at the low end of forecasts.

"Overall Group profitability in 2019 is expected to be first half weighted, principally reflecting a decline in EPS margins and lower oil prices in the second half," the company said on Wednesday.

"Looking further forward, revenues are expected to decrease in 2020 reflecting low new order intake in recent years."

The company added that no charges had been brought against it by the UK's Serious Fraud Office which is investigating allegations of bribery by a former Petrofac executive to win contracts.

Petrofac in June said it had lost out on global contracts worth $10bn after its former head of sales David Lufkin pleaded guilty in February to 11 counts of bribery related to oil deals in Iraq and Saudi Arabia.

"Although not charged, a number of Petrofac individuals and entities are alleged to have acted together with the individual concerned," the company said on Wednesday.

"The SFO investigation is ongoing. The existence of any possible future financial obligations (such as fines or penalties), or other consequences, is unable to be determined at this time."

Shares in the oil services firm have halved since the SFO started its inquiry in 2017 as part of a wider investigation into Monaco-based oil and gas consultancy Unaoil.