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Technip Fourth-Quarter Profit Drops as Oil Spending Growth Slows

Technip SA (TEC), Europe’s largest oilfield-services provider by market value, reported fourth-quarter profit fell 9 percent and said spending growth by oil companies is slowing.

Net income declined to 134.5 million euros ($185 million) from a restated 148 million euros a year earlier, the company said today in a statement. That missed the 138 million-euro average of 13 analyst estimates compiled by Bloomberg.

The company will recommend raising the dividend by 10 percent to 1.85 euros.

Technip, based in Paris, supplies equipment to oil and gas producers to develop offshore fields and onshore plants such as refineries and chemical factories. Total SA (FP), Royal Dutch Shell Plc (RDSA) and Chevron Corp. (CVX) are among clients that plan to rein in spending as oil prices stagnate and costs rise.

“Our clients’ capex continues to increase globally even if at a more moderate rate than in the past decade,” Chief Executive Officer Thierry Pilenko said in today’s statement. He cited depleting older reserves, shale energy in the U.S. and new discoveries as areas for future activity.

Subsea Division

Operating margins in the subsea division fell to 13.5 percent in the quarter from 14.9 percent a year earlier. Margins have been squeezed by longer vessel maintenance and costs from starting a new plant in Brazil.

The subsea margin will be at least 12 percent in 2014 and 15 percent to 17 percent in 2015, according to Technip. Subsea revenue will grow to 4.35 billion to 4.75 billion euros this year and more than 5 billion in 2015, the company said.

The company’s contract backlog expanded to a record 16.58 billion euros at the end of December from 15.9 billion euros at the end of September, it said.

Technip has won orders for offshore projects in Brazil, Dubai and Norway since the start of last year.

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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