Petrofac, the UAE-based engineering and oil field services firm, has posted a strong set of results for the first half of the year, with revenues to 20% and net profit up 32%, but warns of a leaner second half on contract delays.
The group recorded net profit for the first six months of the year of $246.3 million on revenues of $3.2 billion, beating a consensus of analysts’ forecasts.
Unusually for the sector, Petrofac has managed to boost profits relative to revenues, where the trend since 2009 has been for contractors in oil and gas EPC projects to see margins narrow in the face of stiff competition.
CEO Ayman Asfari says Petrofac remains on track to deliver net profit growth of 15% for the full year. However, that prediction signals a flat second half of 2012, a prediction which has shares down 4.7% to 74p in early trading on the London Stock Exchange.
“As previously indicated, over the past few months we have seen delays in certain contract tender prcesses with a number of anticipated awards moving from 2012 to 2013,” Asfari said in a company statement.
Asfari cautions that contract delays have affected the level of 2012 new orders for onshore construction and engineering, which the company expects to remain broadly flat for the rest of the year, though Asfari expects earnings growth “in 2013 and beyond.”
The company remains confident of achieving its target of doubling recurring 2010 group earnings by 2015.
In its outlook statement, Petrofac says it sees “a significant number of bidding opportunities in our core markets into the Middle East, Africa, and the CIS,” but cautions on the delays to a number of projects.
The company’s back log was $8.9 billion on 30 June 2012, down 22% from 11.4 billion at the same time last year. This does not include, however, $1.5 billion of contracts which the company says it has secured but not yet signed. The group's backlog is a key concern for institutional investors.