In a brief update ahead of half year results Petrofac Limited (LON:PFC) said that overall trading was in line with management expectations.
Petrofac Shares Broadly Unmoved
The Engineering & Production Services (EPS) business reported growth in both revenue and margins and “robust order intake”. However, this was offset by continued challenged Engineering & Construction (E&C), with the overall backlog falling by $1bn to $4bn.
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The shares were broadly unmoved following the announcement.
Nicholas Hyett, Equity Analyst at Hargreaves Lansdown:
“There are some signs of underlying progress at Petrofac, with costs coming down and the Engineering & Production Services business doing a pretty good job of winning new business in a tough environment. New contract wins in alternative energies is particularly encouraging – albeit still a small part of the overall business.
However, the core challenge facing the business remains unchanged. The ongoing SFO investigation has locked the group out of some key oil markets and as a result new business numbers are low – not helped by an oil & gas industry which is still reeling from last year’s oil price crash and keeping spending tight as a result. Even the most efficient business will struggle to make money with no projects to work on. Until it’s backlog turns the corner, Petrofac will struggle to thrive.”
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