* Profit cut reflects contract delays, postponements
* Guidance cuts follow two profit warnings in 2013
* Debt guidance dispels fears of capital increase-analyst
(Recasts lead, adds analyst)
By Stephen Jewkes
MILAN, July 29 Italian oil services group Saipem
cut its profit forecast on Tuesday to reflect contract
delays and postponements as it tries to complete the low margin
deals that left it nursing heavy wounds last year.
Saipem, 43 percent owned by oil company Eni, said
it expected net profit for the year to be between 280 million
euros and 330 million euros ($375-443 million), compared with a
previous range of 280 million and 380 million euros.
"We expected confirmation of the guidance, but they trimmed
it," a Milan-based analyst said.
Saipem used to be Europe's biggest oil service group before
losing about half of its market value last year after two profit
warnings, triggered by lower-than-expected margins on some
contracts and a corruption scandal in Algeria.
But a strong order intake since the start of this year,
including the award of the giant South Stream gas pipeline
project from Russia's Gazprom, has warmed investors,
helping lift Saipem's shares some 21 percent.
Saipem said in a statement that completing the low margin
legacy contracts it still had in its portfolio remained a key
element in achieving its guidance for the year.
"That could mean there's another profit warning in the
pipeline," a second analyst said.
At 1601 GMT Saipem shares were down 2.8 percent while the
European oil and gas index was down 0.15 percent.
Earlier this month, French oil services firm Technip
cut operating margin targets for its onshore/offshore
unit for this year and next, citing tighter spending budgets
among its clients.
Big oil companies, pressured by shareholders demanding
bigger cash returns after years of large capital investments,
have started to scale back investments.
The second analyst said a lower long-term debt target given
by Saipem had dispelled fears among some investors that the
company might need a capital increase after its bruising 2013.
Saipem, which sees debt this year at between 4.2 billion and
4.5 billion euros, said it expected its debt pile to come down
to 2 billion euros by the end of 2017.
Sources told Reuters last week that Eni's new management
planned to press on with the sale of its stake in Saipem, after
taking steps to cut the firm's debt and get it on an independent
footing by securing a credit rating.
Saipem cut its operating profit guidance for the year to
between 600 million and 700 million euros from a previous range
of 600 million and 750 million euros.
Net profit in the second quarter came in at 75 million euros
($100.6 million), above a Thomson Reuters I/B/E/S consensus of
71 million euros.
(Reporting by Stephen Jewkes, editing by William Hardy and