Saipem Misses Guidance Due To Balance Sheet Clean Up, Wary On 2015
MILAN, Feb 16 (Reuters) - Italian oil services group Saipem missed full-year forecasts on Monday and gave a wary outlook for 2015 after booking more than 500 million euros ($567 million) of charges to clean up a balance sheet damaged by falling oil prices.
"The business will continue to face industry headwinds as we move through 2015," Chief Executive Umberto Vergine said in a comment on results.
Saipem, 43 percent owned by national oil company Eni , has seen some 10 billion euros wiped off its market value over the past two years after two profit warnings, a corruption investigation in Algeria and a worsening outlook.
The company, which originally said it hoped for a start to recovery in 2015, has since put the date back as low-margin legacy contracts continue to take their toll.
In 2014 Saipem posted a net loss of 230 million euros compared to guidance for a 280 million euro profit, impacted by a 130 million euro writedown on pending revenue.
Operating profit for the year came in at just 55 million euros, compared to a guidance of 600 million euros, due to a 410 million euro impairment charge on assets.
"The impairment charges were in the air but the write down on revenues is a bit of a worry since it could indicate there's more to come," a Milan-based analyst said.
Oil service companies around the world are finding business tough as global crude prices slide, prompting oil companies to cut back on spending.
But with balance sheet charges out of the way, Saipem said it was looking for a 2015 net profit of 200-300 million euros, an operating profit of 500-700 million euros and net debt below 4 billion euros.
"On first glance the 2015 guidance looks positive. But dig a little deeper and the sales, profit and net debt numbers struggle to reconcile," said Nicholas Greene of Bernstein.
"We expect 2015 to be a materially tougher year for Saipem than the guidance suggests or management is publicly willing to acknowledge," he added.
Saipem, which said it planned to invest less this year, said it would focus on cutting debt by using cash raised from operations rather than disposal of assets.
"There are no current plans for a rights issue," Chief Financial Officer Alberto Chiarini said.
Eni, which is keen to get Saipem's debt off its own balance sheet, was forced to shelve plans to sell down its stake in December due to worsening market conditions.
($1 = 0.8812 euros)
(Reporting by Stephen Jewkes; Editing by Greg Mahlich and David Evans)
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