UPDATE 2-Petrofac unsettles investors with vague 2013 guidance

Wed Feb 27, 2013 5:19am EST

Related News

* FY net profit up 17 pct to $632 mln vs $636 mln forecast

* Company guides for "good growth" in 2013

* Analysts disappointed by lack of quantitative target

* Shares down 3.3 pct

By Sarah Young

LONDON, Feb 27 (Reuters) - British oil services firm Petrofac just missed 2012 profit forecasts and failed to give a specific target for this year, spooking investors already unnerved by a rivals' shock profit warning.

Shares in Petrofac dropped as much as 5 percent in early Wednesday trading to their lowest level in over three months, recording the biggest fall on Britain's blue-chip index.

The company, which designs and builds oil and gas infrastructure and also invests alongside oil firms in oil fields, said a strong pipeline of bidding opportunities meant it would deliver "good growth" in net profit this year, giving it confidence in a 2015 earnings target.

However, the vagueness of the forecast for this year disappointed analysts.

"The guidance for 2013, I would argue, is not specific enough compared to how Petrofac have guided in recent years," Macquarie analyst Mark Wilson said.

Analysts' consensus forecast is for a double-digit percentage rise in profit this year, an estimate which now has a question mark over it given the lack of clarity in the statement, Wilson said.

This time last year, Petrofac said it expected profit to grow by at least 15 percent in 2012.

Investors are already nervy on the oil services sector after a surprise profit warning in January from Saipem, Europe's biggest company in the industry, sent shockwaves through what was seen as a buoyant sector.

"We don't really see a read-across from Saipem. The fact is that the long-term fundamentals around oil field services are very good," Petrofac Chief Financial Officer Tim Weller said on a call with reporters.

Oil companies are increasingly reliant on service companies as they are forced to extract hydrocarbons from more difficult environments in a world where all the lowest hanging fruit has already been picked.

Petrofac posted a 17 percent rise in net profit to $632 million for last year, just below a $636 million company-supplied consensus forecast.

The company said it continued to see a strong pipeline of bidding opportunities in its key markets in the Middle East, Africa and the former Soviet Union, giving it confidence in a target to double its recurring 2010 group earnings by 2015.

It also announced a plan to spend $1 billion over the next five years to develop an offshore part of the business that can build projects in deep water. Its current capability is focused on engineering big projects onshore in places like Turkmenistan, Algeria and Iraq.

"There is little in these results to trigger any meaningful near-term share price upside, and we expect a negative reaction to the $1 billion offshore investment announced," JP Morgan analysts said.

At 1000 GMT, Petrofac shares were down 3.3 percent at 1,545 pence. The company raised its dividend by 17 percent to 64 cents per share.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.