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Markets News

UPDATE 1-Italy's Saipem sees brighter end to year after Q3 loss

(Recasts, adds management comments, shares)

MILAN, Oct 28 (Reuters) - Italian energy services group Saipem expects no major delay to projects and predicted brisker business in the last part of the year after swinging to a loss in the third quarter.

“We are not out of the woods yet ... (but) the picture starts to get brighter,” Chief Executive Stefano Cao said in a conference call.

Saipem reported a net loss in the third quarter of 131 million euros ($155 million), impacted in part by higher-than-expected costs related to the fallout from the COVID-19 pandemic.

That was below analysts’ consensus forecast for a loss of 31 million euros, according to Refinitiv.

New orders in the first nine months fell to 5.3 billion euros from 13.9 billion euros a year ago, but the company said a backlog of more than 21 billion euros gave it good visibility for next year.

“Our clients are moving ahead again at pace with projects ... and they’re asking us to do more. We expect higher activity levels in the fourth quarter,” Cao said.

Saipem, a market leader in subsea construction for the oil and gas industry, is looking to develop new lines of business to boost order books, including floating renewable energy plants.

Cao, who acknowledged there were payment delays from some clients due to the epidemic, said he expected investments next year to be higher than the target this year of less than 400 million euros.

He said a number of projects could come up for grabs at the end of the year or early next in areas such as Qatar, Abu Dhabi and Saudi Arabia as well as a series of offshore wind farms.

While debt rose, Saipem said it had more than 2 billion euros of liquidity and could comfortably withstand any prolonged period of uncertainty.

Revenues and core earnings in the second half of the year are seen broadly in line with the first half.

“There’s a bit more to do to reach guidance but projects have restarted and liquidity is good,” said Mediobanca oil analyst Alessandro Pozzi.

At 1012 GMT Saipem shares had reversed early losses to trade up 1.4%.

$1 = 0.8461 euros Reporting by Stephen Jewkes, editing by Giulia Segreti and Mark Potter

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