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Petrofac - Trading in line with guidance

Nicholas Hyett | 25 June 2019 | A A A
Petrofac - Trading in line with guidance

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Petrofac Ord USD0.02

Sell: 151.95 | Buy: 152.30 | Change -4.40 (-2.79%)
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Petrofac reported revenues of $2.8bn in the first half, up 1.3% year-on-year. However, an increase in less profitable contracts, cost overruns and higher taxes dented margins, with net profits down 19.4% at $154m.

The board announced an interim dividend of 12.7 cents per share, in line with last year.

The shares fell 6% in earl y trading.

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Full Year Results

The Engineering & Construction (E&C) business saw revenues rise 2% to $2.3bn and net profits fall 16% to $148m. The division won $1.6bn of new contracts during the period including projects in Algeria, Oman and the Netherlands.

Engineering & Production Services (EPS) delivered revenues of $0.4bn in the half, up 4%, with net profits of $23m down 15%. The business won $0.4bn worth of new contracts.

Integrated Energy Services (IES) revenues fell 27% to $99m - although that was driven by disposals, without which revenue would have risen 5%. The underlying growth reflects higher average realised prices and increased production. Reported net profits fell 56% to $7m, although excluding the effect of asset disposals that would represent 147% growth.

The total value of the order book fell from $9.6bn at the start of the year to $8.6bn at the end of the first half. E&C and EPS both saw total back log decline. The group is pitching on $13bn of opportunities in the second half.

The group finished the half with net cash of $69m.

Margins in the key E&C division are now expected to be at the lower end of guidance for the year as a whole, with lower overall profitability in the second half. Revenues are expected to decline in 2020, reflecting the lower order intake in recent years.

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This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.