Technip Pipe Deals Boost Results
PARIS, July 25 (Reuters) - French oil services company Technip posted a sharp rise in second-quarter profit, beating analyst forecasts as it secured new contracts for pipes in West Africa and North America, seemingly unaffected by the woes of its competitors.
The builder of oil rigs maintained its full-year earnings growth targets after it reported a 19 percent year-on-year rise in quarterly net profit to 162 million euros ($215 million) and an operating margin of 10 percent.
It confirmed a forecast for group sales to grow by between 11 and 16 percent in 2013 and its operating margin to be around 15 percent at its subsea unit and 6-7 percent at its onshore/offshore unit.
Technip shares rose 2.9 percent by 0705 GMT on Thursday, the top gainer on the CAC 40 index of French blue-chip stocks .
"The margin of 15.9 percent in the subsea division shows the growth potential for margins from 2014 once new assets, two vessels and a plant, are up and running," said Julien Laurent, energy analyst at Natixis in Paris.
The results stand out because competitors such as Italy's Saipem, the sector leader, and Norwegian groups Aker and Subsea 7 have all issued profit warnings this year, blaming Brazilian activities.
In Brazil, dominant national company Petrobras's negotiating tactics and government demands have combined to squeeze industry profit margins. Saipem has also been embroiled in a corruption scandal in Algeria.
"In the last few months, we have not seen any meaningful change in our clients' drive to sanction new projects," Technip Chief Executive Thierry Pilenko said on a conference call.
The Paris-based group had reaffirmed its 2013 financial targets last month after Milan-based Saipem, partly owned by oil and gas major ENI, issued its second profit warning in recent months.
STEEL PRESSURE
Technip's order intake stood at 2.8 billion euros in the three months to the end of June, up from 2.5 billion a year ago.
Its oil company clients, helped by prices above $100 per barrel, have raised exploration spending, venturing into areas requiring new techniques to get access to oil - such as the Arctic or very deep waters off west Africa.
"Capital expenditure programmes are still growing. Clients are talking about growth for next year," Pilenko said. "The quantification of this growth is too early to tell. People are talking anywhere between 5 and 15 percent depending on the operators."
Second-quarter current operating profit rose 17 percent to 242 million euros on 18 percent sales growth to 2.42 billion.
Analysts on average expected current operating profit of 234.4 million euros, net profit of 158.8 million and sales of 2.33 billion, according to Thomson Reuters I/B/E/S.
Asked about future costs in its supply chain, Technip's CEO struck an upbeat note as the economic slowdown may bring metals prices such as steel down.
"There's something which has not yet trickled down the supply chain, which is the fact that steel capacity in the world has increased dramatically, putting pressure on the cost of steel," Pilenko said in the call.
"Over the next couple of years, we may see better prices for steel, which bodes well for offshore construction, which takes a lot of steel."
Shares in Technip sit roughly where they were at the start of 2013, in line with the broader European oil & gas sector , while Saipem's have tumbled by close to 50 percent. ($1 = 0.7555 euros)
(Reporting by Michel Rose; editing by Mark John and Tom Pfeiffer)
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