Petrofac reports 14% rise in full-year profit on higher operating income

The company has a new order intake of $3.2bn and backlog of $7.4bn

Petrofac's operating income for the year rose 38.3 per cent to $220 million. Bloomberg

Petrofac, the London-listed oilfield services firm with offices in Sharjah, reported a 14 per cent increase in full-year profit as operating income rose and expenses dropped.

Net profit attributable to shareholders for the period ending December 31, climbed to $73 million (Dh268m), the company said in a filing to the London Stock Exchange, where its shares trade.

Operating income rose 38.3 per cent to $220m, while selling, general and administrative expenses fell 5 per cent to $216m. Finance expenses slid 28 per cent to $58m and revenue dropped 5 per cent to $5.5 billion.

"Best-in-class execution has delivered attractive margins in our core businesses, underpinned by an unrelenting drive to strengthen our cost competitiveness by investing in talent, local content and digital technology,” said Ayman Asfari, Petrofac's group chief executive.

“Our migration to a capital light business and tight working capital management has improved cash flow, with agreed non-core divestments set to further strengthen our balance sheet and enhance returns.”

The company has new order intake of $3.2bn and backlog of $7.4bn as of the end of last year. In Algeria, Oman and the Netherlands, new order intake amounted to $2.1bn, it said.

"Looking forward, we expect 2020 to be a year of transition," said Mr Asfari, adding, "we are encouraged by the improving market outlook, recent new awards and $37bn of bid opportunities scheduled for award by the end of 2020.”

“Consequently, we are investing in maintaining our bench strength to preserve our market-leading execution capability. This investment - together with project mix and the low new order intake of recent years - will impact financial performance in 2020, but best positions us for a return to growth as we rebuild our order book."

Petrofac said net profit “was negatively impacted by exceptional items and certain re-measurements of $203m, of which about $172m were non-cash items.” The agreement to sell Petrofac's remaining 51 per cent in its operations in Mexico triggered a non-cash impairment charge of $49m, according to the company.

The board proposed a final dividend of 25.3 cents per share, which will be paid on May 22 to eligible shareholders. Together with the interim dividend of 12.7 cents per share, this brings the total dividend for the year to 38.0 cents per share.

Petrofac has had a presence in the UAE since 1991 and employs about 3,000 people in the country, many of whom work from its major operational centre in Sharjah.

Earlier this month, the company won two major contracts from Abu Dhabi National Oil Company to construct offshore facilities for the Dalma gas development project.

The two contracts, valued $1.65bn, were given to Petrofac Emirates and to a joint venture between Petrofac and Malaysia’s Sapura Energy through its subsidiary’s branch office in Abu Dhabi. The company also secured a new contract with the state-owned Sharjah National Oil Corporation worth $40m for the development of a project in the UAE.