Saipem rethink after wind-related issues spark profit warning

Oilfield services group Saipem (SPM.MI) has concluded a review of key projects and backlog following a surprise profit warning last month.

In January the Milan head quartered company issued a profit warning and said its accounts for 2021 were expected to show a loss of more than one-third of the company’s equity.

Saipem blamed rising supply chain costs and poor project margins in offshore wind and onshore construction.

Reports later alleged that its woes were connected to a huge loss on a contract to supply foundations for the EDFled Neart na Gaoithe offshore wind project on the east coast of Scotland.

At the time, Saipem declined to comment on the reports.

The group said it had reviewed a total of 22 projects, representing around 80% of its total consolidated backlog as of September 30, 2021, or around 88% of backlog for its engineering and construction unit.

It said this review “has not shown any additional impact” from its initial statement in January.

However, it reaffirmed it would take a 1 billion euro (£840 million) hit as a result of increased difficulties on “certain specific offshore wind and onshore E&C projects”.

Following the backlog review, Saipem’s board has revised its 2022-25 strategic plans, with a particular focus on the “growing trends” in the offshore E&C and offshore drilling markets.

It said it would now target a 150 million euro (£125m) reduction in structural costs, and would opt for “increased selectivity” in acquisition of onshore E&C work.

Meanwhile, the company said discussions over a financing package were continuing with shareholders Eni and CDP Industria, and with its banking partners.

Saipem’s board has revised its 2022-25 plans.