Oilfield services group expects sustained period of subdued demand from customers.
Petrofac will deepen its cost-cutting next year after warning that revenues would continue to be hit by the pandemic.
The oilfield services company said on Wednesday it planned to reduce costs by a further $250m next year, up from a previous target of $200m, after slashing $125m in 2020 as subdued energy demand led its customers to delay projects and curb spending.
Petrofac expects revenues of $4bn this year — down from $5.5bn in 2019 — and has warned that profitability will be “materially lower” when it presents its full-year results in February. However, it said trading had been in line with expectations in a “difficult environment”.
The group, whose longstanding chief executive Ayman Asfari is stepping down this year, warned that “it remains unclear how long business activity in our industry will be impacted by market conditions”, adding that “low order intake over recent years will result in a decline in revenue next year”.
Shares were 2.3 per cent lower in early trading in London.
Petrofac, which designs, builds, manages and maintains energy infrastructure from refineries to offshore wind farms, suspended its dividend this year and said it would cut its 11,500-strong global workforce by a fifth. The company has also suffered higher costs as a result of travel restrictions and lockdowns as it was not able to move workers on and off projects so easily.
Its order backlog as of November 30 was $5.1bn, against $7.4bn at the end of 2019. New orders this year have totalled $1.4bn, down from more than $3bn in 2019.
“In this environment, our strategic priorities are clear,” said Mr Asfari. “We are focused on conserving cash, cutting costs and rebuilding backlog, while delivering operational excellence.”
Mr Asfari will be replaced at the start of the 2021 by Sami Iskander, an energy industry veteran of 30 years, who until last year was executive vice-president of Royal Dutch Shell’s upstream joint-ventures business.
There was no further update on Wednesday on the UK Serious Fraud Office’s investigation into suspected bribery, corruption and money laundering at Petrofac, which was launched in 2017 and linked to the watchdog’s wider investigation into Monaco-based consultancy Unaoil.
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