By Liam Moloney
ROME--Italian oil services company Saipem SpA (SPM.MI) Tuesday
said its first-quarter profit more than halved due to lower margins
in its key divisions, but sought to reassure investors by
confirming its earnings targets for the year.
The steep fall in profit, more than what the market had
expected, comes as Saipem has lost more than a third of its market
value in the last three months after unexpectedly slashing its 2012
earnings guidance in January.
Saipem reported a first-quarter net profit of 110 million euros
($143 million) from EUR231 million over the same period in
2012.
Much of the slippage was due to the poor performance of its
engineering and construction divisions which suffered from
low-margin contracts signed in a highly competitive market.
Revenue fell 1.4% to EUR3.09 billion and operating profit
slipped 46% to EUR202 million.
A survey of seven analysts polled by Dow Jones Newswires had
expected a net profit of EUR124.7 million on revenue of EUR3.30
billion and an operating profit of EUR221.1 million.
Milan-based Saipem, which is controlled by oil company Eni SpA
(E), has been in the spotlight in recent months after it announced
in December that it was being investigated by Italian prosecutors
over alleged corruption linked to some Algerian contracts. Saipem
denies any wrongdoing.
Tuesday, the company confirmed an Algerian court has upheld the
freezing of about EUR80 million in one of its accounts held in the
country. It also said it has been informed of a possible extension
of the ongoing investigation by Algerian prosecutors, although it
has no details of the probe's status or the people involved.
Saipem said that a partial reason of the net debt increase in
its accounts of EUR567 million to EUR4.85 billion at the end of
March from three months earlier is due to the Algerian
investigation which is causing significant delays in the approval
of progress reports in the country.
At the start of 2013, Saipem spooked investors by reducing its
2012 earnings guidance because of a gloomy outlook for this year.
This came after months of assurances that the company was
optimistic about meeting its targets.
Saipem is to hold a conference call at 1330 GMT to comment on
its results. It will present its operational review Wednesday.
At 1220 GMT, Saipem shares were flat at EUR20.99, giving it a
market value of EUR9.25 billion.
Write to Liam Moloney at liam.moloney@dowjones.com
Order free Annual Report for Saipem SpA
Visit http://djnweurope.ar.wilink.com/?ticker=IT0000068525 or
call +44 (0)208 391 6028
Order free Annual Report for Eni SpA
Visit http://djnweurope.ar.wilink.com/?ticker=IT0003132476 or
call +44 (0)208 391 6028
Order free Annual Report for Eni SpA
Visit http://djnweurope.ar.wilink.com/?ticker=US26874R1086 or
call +44 (0)208 391 6028
Subscribe to WSJ: http://online.wsj.com?mod=djnwires