(Alliance News) - Petrofac Ltd on Wednesday said it swung to a pretax profit in the first half of the year after a sizeable exceptional items charges the year before and slightly higher revenue.
The oil and gas services company reported a pretax profit for the six months ended June 30 of USD193 million, reversing a USD52 million loss a year before.
Revenue climbed 1.1% to USD2.82 billion from USD2.79 billion and this, combined with a reduction in exceptional items and re-measurements to USD15 million from USD280 million, resulted in a profit swing.
The higher exceptional items and re-measurements in 2018 included a USD79 million Greater Stella Area impairment charge and USD157 million impairment associated with assets in Mexico. These did not repeat in 2019.
The revenue rise was due to an underlying increase in all of Petrofac's operating segments, though these were slightly offset by asset sales in Integrated Energy Services back in 2018.
Petrofac Chief Executive Ayman Asfari said: "Petrofac has delivered good results that reflect solid operational performance across the business.
"New order intake year to date has been impacted by recent challenges in Saudi Arabia and Iraq. Looking forward, the group has a busy tendering pipeline with around USD13 billion of bid opportunities due for award in the second half of the year.
"We remain committed to our strategy of delivering best-in-class execution for our clients and enhancing returns for our shareholders by reducing costs, driving digitalisation, increasing local content, improving cash conversion and divesting non-core assets. These ongoing initiatives will improve our competitiveness in core and growth markets, as well as best position the business for a return to growth in the medium-term."
Petrofac declared a 12.7 US cents per share interim dividend, flat from 2018.
The company said it is "well positioned" for the rest of 2019 and had an USD8.6 billion backlog as of June 30, down from USD9.6 billion at the end of 2018. The company also has USD2.6 billion of secured revenue for the second half of the year.
Engineering & Construction unit revenue will be in line with management guidance, with revenue to be USD4.5 billion for the year and a net margin at the low end of guidance.
Petrofac's profitability is to be weighted toward the first half due to falling margins and declining oil prices in the second half of the year. Revenue is set to fall in 2020 due to a drop in new order intake over recent years.
Capital expenditure for the year is due to be about USD125 million, up from USD98 million.
Addressing the UK Serious Fraud Office investigation into Petrofac bribery allegations, the firm noted Wednesday that no charges have been bought against the company or its officers and current employees and the company is still engaging with the SFO.
"We are focused on bringing this matter to closure as quickly as possible and believe this is in the best interests of all stakeholders," said Petrofac.
Shares in Petrofac were down 0.9% at 402.20 pence in London on Wednesday morning.
Petrofac (PFC)