By Liam Moloney
Saipem SpA (SPM.MI), Europe's biggest oil services company by
market value, Tuesday confirmed it expects its margins to show a
gradual recovery in 2014, with Chief Executive Umberto Vergine
saying the firm's stricter discipline on the terms of new contracts
will pay off.
"We are happy in both terms of volumes and profitability of
order intakes in the first quarter" as an indication of how future
contracts are expected to go, said Mr. Vergine on a conference call
on the company's first-quarter results.
"The E&C [engineering and construction] contracts are going
in the right direction," said Mr. Vergine.
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.
On Tuesday, Saipem confirmed its 2013 targets.
Mr. Vergine predicted on the call that Saipem's peers will have
to follow it in changing their commercial strategies to reflect the
need for stricter financial discipline in contractual terms.
Earlier Tuesday, Saipem said its first-quarter net profit more
than halved on the year, with much of the slippage due to the poor
performance of its engineering and construction divisions suffering
from low-margin contracts signed in a highly competitive
market.
Write to Liam Moloney at liam.moloney@dowjones.com
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