Petrofac delivers profit warning on IES struggles

9th May 2014 07:09

- Net profit to be 580-600m dollars this year- Previously guided to 'flat to modest growth' on 2013- IES division delivers lower-than-expected earningsOilfield services group Petrofac delivered a profit warning on Friday, saying that its bottom line in 2014 is likely to weaken due to lower-than-expected earnings from its IES division.The company is guiding to a net profit for the full year in the region of $580-600m, down from $650m in 2013. This compares with previous guidance in February when it had said it expected to deliver "flat to modest growth" in 2014.Petrofac operates through two main divisions: Engineering, Construction, Operations & Maintenance (ECOM) and Integrated Energy Services (IES).A good operational performance was seen at ECOM during the first quarter with strong progress across the engineering, procurement and construction (EPC) portfolio, the company said. Strong order intake of $4.4bn in the period took group backlog to record levels of $18.6bn by March 31st, up from $15bn the same time last year.However, IES has suffered from delays to the Greater Stella Area project, lower-than-expected production on Ticleni, the dilution of its equity interest in Seven Energy and no significant contribution from new awards.Petrofac said it has recently completed a review of the IES unit, resulting in a "re-focusing of our business development plans". The company said it has stepped back from certain "business development opportunities" and reduced capital expenditure plans.Chief Executive Ayman Asfari said: "Going forward, we will prioritise IES opportunities which best lever our existing core areas of strength, which offer clear synergies with ECOM, and which deliver attractive returns on capital employed."BC