* New orders in Q1 half those of a year ago
* Q1 operating profit falls but FY guidance confirmed
* CEO says no plans to break up the company
(Recasts lead, adds CEO, broker comments, shares)
By Stephen Jewkes
MILAN, April 21 Italy's Saipem is
working to expand new lines of business including wind farms to
help it cope with a slump in order books among oil services
Oil contractors around the world have come under pressure as
weak oil prices force oil majors to cut billions of dollars in
costs and delay final investment decisions on projects.
"We're looking to grow in areas like wind farm projects,
especially in the North Sea, and dismantling oil and gas
platforms," Saipem's chief executive Stefano Cao said on Friday
following the company's first quarter results.
Production cuts by OPEC have helped crude prices, but
recovery for oil contractors is expected to be uneven, with
those finding it tougher to cut capacity and costs lagging
others with more flexible business models.
Saipem, which has both onshore and offshore drilling assets,
is a market leader in subsea engineering and construction (E&C)
including the world's most expensive oil field, Kazakhstan's
"Pressure continues this year, especially in offshore E&C
and few initiatives are being sanctioned... but we are on the
right path" Cao said.
Saipem, jointly controlled by oil major Eni and
state-lender fund FSI, said earlier on Friday it was sticking to
forecasts for the year after operating profits in the first
quarter fell 21 percent.
A slowdown in the group's core offshore E&C business as well
as in drilling led to a 20.3 percent fall in revenues to 2.3
billion euros ($2.5 billion) in the period.
"Saipem's order intake was truly disappointing. Although we
were prepared for a weak quarter, we believe that group's order
intake is the lowest since 2001," broker Mediobanca said, but
added margins had improved.
At 0816 GMT Saipem shares were up 1.9 percent, while the
European oil and gas sector was down 0.5 percent.
Some analysts have said Saipem will need to streamline its
business and sell off assets to help fund development.
But Cao denied a break up was being considered. "No way
whatsoever. I'm not here to break up the company," he said,
adding the group could consider joining forces with others to
help improve its onshore drilling performance.
($1 = 0.9325 euros)
(Editing by Agnieszka Flak and Alexander Smith)