British engineering giant Petrofac has reported a 10.7% fall in core earnings for the first half of this year, as subdued oil prices forced exploration and drilling companies to defer or cancel service contracts, Reuters reports.
The company’s adjusted net profit for the first half of $158mn beat analysts’ estimate of $142mn.
‘The decline in, and weaker outlook for, commodity prices has had a significant impact on capital investment in the industry, impacting our cash flow’, Petrofac said in a statement.
Petrofac cut its full-year capital expenditure guidance to $200-$250mn from $300-$350mn, in an effort to reduce its debt, which rose to $1bn at the end of June, up from $600mn in December.
Earnings before interest, tax, depreciation and amortisation (EBITDA) fell to $323mn for the first half ended June 30. Revenue for the half year fell about 20% to $3.13 billion.
Order backlog stood at $12.5 billion as of June 30, said the company, which designs, builds, operates and maintains oil and gas facilities.
The company sees a second-half backlog of $3.3bn, which implies revenue of about $6.4bn for the year when combined with the revenue for the first half, according to Reuters.
Petrofac is among the London-listed EPC services companies under investigation by the UK’s Serious Fraud Office for its dealings with Monaco-based Unaoil.
In May, Petrofac suspended its chief operating officer in response to the investigation, sending its shares plunging as investors feared that the probe and the suspension could hurt the company’s ability to win work.
Petrofac has recently said that Italy’s markets watchdog had imposed sanctions on its CEO, Ayman Asfari, including a 300,000 euro ($358,470) fine, in relation to dealing in shares of an Italian company. Asfari denies the allegations and has pledged to contest the decision.
