Oil and Gas Problems Pile Up for New Bilfinger CEO
FRANKFURT, Aug 12 (Reuters) – The new chief executive of Germany's Bilfinger said he would do whatever it took to turn the company around as problems escalated at its main division servicing oil and gas clients and charges for a business it is selling pushed it to a record net loss.
The engineering and services group predicted a drop of as much as 43 percent in its full-year core earnings after an unexpectedly sharp drop in oil prices hit its Industrial business, compounding problems at the up-for-sale Power division.
Industrial, which now accounts for the majority of Bilfinger's business, on Wednesday reported an 11 percent fall in core profit in the second quarter.
"The negative impact from the low oil price on those divisions that are active in the oil and gas sector has... been significantly stronger than initially anticipated," Bilfinger said in its quarterly earnings report.
CEO Per Utnegaard said: "We will resolutely face the changes that are necessary: We will increase our profitability, reduce complexity in the group, simplify processes and decrease costs in all areas."
Utnegaard, brought in by major shareholder and activist investor Cevian after Bilfinger issued six profit warnings in the space of a year, is conducting a review of Bilfinger's businesses and is due to present the results in October.
Bilfinger's Power business has suffered from Germany's switch to renewable energy, which has left major customers such as large German fossil-power providers unable to invest or renew maintenance contracts.
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