Petrofac First-Half Profit Falls on Delays as Backlog Rises

Petrofac Ltd.’s first-half profit fell 44 percent after project delays sapped revenue at the U.K.’s largest oil and gas engineer. The order backlog climbed to a record.

Net income slid to $136 million in the six months ended June 30 from $243 million a year earlier, the London-based company said today in a statement. That missed the $168 million average of four analyst estimates compiled by Bloomberg. Revenue dropped to $2.5 billion from $2.8 billion.

Petrofac, which last week appointed a new chairman, has declined 8.3 percent in London trading this year as it seeks to secure earnings amid spending cuts by oil companies. It lowered its profit forecast in May on project delays, especially in the North Sea and Romania. Earnings will probably be weighted toward the second half as some projects move into the execution phase, it said today.

The shares declined 0.3 percent to 1,123 pence at the close in London trading, valuing the company at 3.9 billion pounds ($6.4 billion).

“The key incremental negative is the deterioration in working capital,” Christyan Malek, an analyst at Nomura Holdings Inc., said in an e-mail. Total receivables of $700 million to $800 million from projects in Abu Dhabi, Algeria and Mexico are at risk, he said, after late payments by customers and “slower-than-expected performance” at the Laggan Tormore project west of Shetlands.

Record Backlog

Petrofac’s order backlog reached a record $20.3 billion and the company is expecting full-year profit of $580 million to $600 million, it said. It kept its dividend unchanged at 22 cents a share.

“We’ve got good revenue visibility for the second half of the year as we ramp up activities,” Chief Financial Officer Tim Weller said on a call.

The company has a pipeline of bidding opportunities in the second half and is confident of securing further awards and contract extensions, it said, without elaborating. Since July, it has won contracts for a refinery from Malaysia’s Petroliam Nasional Bhd. and for engineering services from Kuwait’s national oil company.

Norman Murray, chairman since May 2011, resigned from the board for “compassionate reasons” and is being replaced by Rijnhard van Tets, the company said on Aug. 22.

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