The best result since 2017
Saipem returns to profit for 40 million and confirms the estimates for the whole year “It is the first quarter in profit since 2019 and the best since 2017 in terms of net profit” said Chief Financial Officer Paolo Calcagnini as he presented the mid-year accounts to the financial community. The positive result compares with the loss of 120 million last year. . “The collection of orders and the financial results continue to be positive and in line with the objectives of the strategic plan – added the managing director Alessandro Puliti – supported by the restart of an important cycle of investments by our customers”. The estimates provided in March indicate revenues of over eleven billion and an operating margin of 850 million for the full year. With these results, the group is preparing to return to the dividend even if, as explained by Puliti; “Now it is difficult to define a precise date but the path we are taking is certainly the right one, and it will lead us to achieve this goal”.
The resumption of work in Mozambique
An important boost to the improvement of the accounts will come from the restart of the works with Total in Mozambique which have been stopped for two years. “In view of the restart – explained the managing director during the meeting with the press – a check was made of the market conditions and therefore extra costs were generated”. However, the head of the company did not want to indicate the amount of these additional charges “Right now – he explained – we are on a path together with our client and the partners of Mozambique Lng to renegotiate them and reduce them to a minimum”. In Saipem they hope to be able to define the new conditions by the summer.
Costs and inflation
“To do this – he continued – we are meeting with our subcontractors to review the offers they have made us, until we manage to reach a figure that our client deems reasonable”. In part they are renegotiations and in part they are “new tenders for updated and competitive prices”. “We have had the first evaluations – added Puliti – and we are working to contain the increase in costs as much as possible, to make it acceptable for our customer”. As for the relocation works, Puliti explained that “the area on which the plant stands made it necessary to move some villages to a safe area, creating a new village and carrying out interventions to improve social sustainability, with agricultural projects, assets and services for the maintenance of the camp where thousands of workers will have to arrive in the future”. “All of this – concluded Puliti – has achieved tangible progress, which we verified last week” . In any case, the negotiation is not simple because you have to take into account what has happened in the world” such as inflation and “costs relating to the fact that extra costs are introduced when you stop and start again”, concluded the CEO .
The judgment of the analysts
Jefferies reconfirms the BUY recommendation and the TP at €1.8 after the second quarter accounts. The data, analysts comment, are “positive” and, “beat expectations across the board, with Offshore E&C reporting its first double-digit margin since the second quarter of 2020 and the Offshore Drilling margin showing a further improvement”.
SAIPEM Equita Sim confirms HOLD rating, with TP of €1.6, after the company signed a Letter of Intent for a large-scale CO2 capture plant to be installed at the existing Stockholm Exergi bio-cogeneration plant (BECCS ). The Letter of Intent allows, meanwhile, the start of limited activities, related to engineering, while the main terms of the EPC contract are being finalized, which is expected to be signed in Q3 2023. Saipem’s scope of work , the experts explain, concerns the engineering, procurement and construction of the carbon capture unit, CO2 storage and ship loading systems for CO2 transport. Once completed, the plant will be able to capture 800 ktpa of biogenic CO2 from the V rtaverket plant in Stockholm, fueled by biomass. Stockholm Exergi’s BECCS project will receive 180 million EU funding.
This article has been prepared for informational purposes only, it does not constitute advice or a solicitation to buy or sell financial instruments. The information reported is in the public domain, but may be subject to change at any time after publication. We therefore decline all responsibility and remind you that any financial transaction is carried out at your own risk.