By Liam Moloney
Italian oil services company Saipem SpA (SPM.MI) Wednesday said
it will target more profitable contracts as part of an operational
review that followed an unexpected guidance cut in January, which
resulted in losing more than one third of its market value.
Saipem's risk management system has been refined to focus on
more rigorous contract approval process aimed at eliminating
low-margin deals from its portfolio, said Europe's biggest oil
services company by market value.
"We believe that the operational improvements we are
implementing...will optimally position Saipem to deliver a recovery
in profitability and sustained growth in the future," said Chief
Executive Umberto Vergine in a statement.
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, when it reported first-quarter results, Saipem
confirmed its 2013 targets, adding it expects to see a "gradual"
recovery next year.
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.
Wednesday, the company said its more disciplined commercial
strategy, especially at the bidding phase and during contract
negotiations, as well as enhanced project execution will lead to
improved relationships with clients.
Saipem is scheduled to hold the presentation of the operational
review in London at 1300 GMT, Wednesday.
At 1150 GMT, shares lose 1.0% at EUR20.45, while Italy's
benchmark FTSE Mib Index slips 0.6%
Write to Liam Moloney at liam.moloney@dowjones.com