Petrofac full-year core profit beats expectations

Petrofac, which designs, builds, operates and maintains oil and gas facilities, said new order intake stood at $5.2 billion, compared with $1.9 billion it reported same time last year. (Courtesy Petrofac)
Updated 01 March 2018
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Petrofac full-year core profit beats expectations

BENGALURU: Oilfield service firm Petrofac reported better-than-expected core earnings on Thursday and said chief executive Ayman Asfari would resume full duties with immediate effect.
The company said it had concluded that restrictions imposed on Asfari in May 2017 were no longer appropriate.
Britain’s Serious Fraud Office (SFO) began an investigation in May into the activities of Petrofac and its units in connection with a probe into Monaco-based Unaoil on suspected bribery, corruption and money laundering.
Last month, the company said its top management, including chairman and executive directors, would be interviewed by the SFO.
“We expect the market to take positively the resumption of duties from the CEO ... The market may perceive this as reflecting positively on the SFO investigation outcome,” Morgan Stanley analyst Robert Pulleyn said in a note.
Petrofac also said chief operating officer Marwan Chedid had stepped down and would act in an advisory capacity for a transitional period to assist on his succession.
Chedid was suspended in May and he consequently resigned from the board.
The company said it planned to exit the deep-water business and expects to take an impairment charge of $176 million related to its offshore construction vessel JDS6000.
Oilfield service companies had been hurt by weak demand as recent subdued oil prices forced explorers and producers to cut capital expenditure and defer or cancel contracts.
However, Petrofac said in December it saw a recovery in orders and it continued to see a high level of tendering activity in its core markets.
The company, which designs, builds, operates and maintains oil and gas facilities, said new order intake stood at $5.2 billion, compared with $1.9 billion it reported same time last year.
Petrofac said net debt was about $600 million as at December 31, well below the $850 million it forecast in December.
Earnings before interest, tax, depreciation and amortization rose 3.7 percent to $730 million for the year ended December 31, beating analysts’ average estimate of $695.2 million, according to Thomson Reuters.
However, the company reported a total net loss of $29 million, taking charges of $372 million related to exceptional items.
Revenue fell 18.8 percent to $6.40 billion with an order backlog of $10.2 billion at the end of 2017, compared with $11.7 billion, a year ago.


Siemens CEO pushes plans to boost Iraqi power infrastructure

Updated 23 September 2018
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Siemens CEO pushes plans to boost Iraqi power infrastructure

FRANKFURT: Siemens said its boss Joe Kaeser met Iraq’s prime minister on Sunday to discuss a proposal by the German company to expand the Middle East nation’s power production.
The German engineering group said it was proposing a deal to add 11 gigawatt (GW) of capacity over four years, saying this would boost the country’s capacity by nearly 50 percent.
It did not give a value, but such a contract would be worth several billion euros based on previous comparable deals.
Iraq has a wide gap between electricity consumption and supply. Peak demand in the summer, when people turn on air conditioners due to high temperatures, is about 21 GW, far exceeding the 13 GW the grid is currently provides, experts say.
Kaeser said in a statement after meeting Prime Minister Al-Abadi that they had “discussed the comprehensive Siemens roadmap to build a better future for the Iraqi people.”
“In Egypt, we have done the same and successfully built up the power infrastructure in record time with the highest efficiency,” he said.
In 2015, Siemens signed an 8 billion euro ($9.4 billion) deal with Egypt to supply gas and wind power plants to add 16.4 gigawatts of capacity to the country’s power grid, marking the group’s single biggest order.
The proposal for Iraq, first pitched in February, would include cutting Iraq’s energy losses, introducing smart grids, expanding transmission grids, upgrading existing plants and adding new capacity.
The group would also help the government secure funding from international commercial banks and export credit agencies with German government support, creating thousands of jobs in Iraq.
Siemens would donate a $60 million grant for software for Iraqi universities, it said.