Technip First-Quarter Profit Drops 42% as Brazil Plant Starts Up
Technip SA (TEC), Europe’s largest oilfield-services provider by market value, said first-quarter profit fell 42 percent after starting a manufacturing facility in Brazil and completing projects in the Gulf of Mexico.
Net income declined to 67.2 million euros ($93 million) in the first quarter from a restated 116.2 million euros a year earlier, the Paris-based company said. That beat the 62.4 million-euro average of 10 analyst estimates compiled by Bloomberg. The company confirmed financial targets for this year and next.
“We have not yet seen a slowdown in orders,” Pilenko said today on a conference call, citing recent orders in Angola and Indonesia.
Technip, which supplies equipment to oil and natural gas producers, has said spending growth in the industry may slow. The company warned at the end of last year that the profit margin for its subsea business would be “exceptionally low” in the first quarter.
Technip reported operating margins in the subsea division fell to 5.5 percent in the quarter from 12.7 percent a year earlier. The company has said margins have been squeezed by longer vessel maintenance and costs from starting the plant in Brazil. The margin for onshore-offshore operations was 5.9 percent in the latest period compared with 6.8 percent previously.
Technip’s order intake was 2.9 billion euros in the first three months of the year, bringing the contract backlog to a restated 15.4 billion euros, according to today’s statement.
The oil services provider reiterated that it expects subsea margin will be at least 12 percent in 2014. Subsea revenue will grow to 4.35 billion to 4.75 billion euros this year, the company said. Onshore-offshore revenue will be between 5.4 billion euros and 5.7 billion euros with margins of 6 percent to 7 percent.
Total SA (FP), Royal Dutch Shell Plc (RDSA) and Chevron Corp. (CVX) are among Technip’s clients that plan to rein in spending. Costs for energy projects have “increased dramatically,” Total Chief Executive Officer Christophe de Margerie said earlier this month at a conference.
To contact the reporter on this story: Tara Patel in Paris at email@example.com