Petrofac (PFC) more than doubled new orders in its onshore engineering division last year, but the oil-services giant still finished the year with net debts of $727m (£435m) against a cash surplus of $233m a year earlier. This reversal can be blamed on a net cash outflow of $893m, which was primarily a consequence of the postponed contracts responsible for November’s profit warnings. Petrofac signed a $3.7bn deal with the Kuwaiti national oil group after the period ended, showing the group’s ability to keep its order book ticking over. But sentiment towards the stock won’t improve until it starts to convert those orders into cashflows a little more rapidly.
Petrofac reported modest growth in pre-tax operating profit last year - up 1 per cent to $771m on a margin of 12.5 per cent (2012: 12.1 per cent). Though this was broadly in line with consensus, the group expects little growth this year as it scales back its capital commitments. Unfortunately, the issue of contract delays will continue to act as a drag on performance. Revenues that would have crystallised during 2014 from the Upper Zakum field development in Abu Dhabi, and Malaysia’s Berantai development project, have been delayed to next year and beyond.
All of Petrofac’s business segments reported solid revenue growth for 2013, with the sole exception of the key Onshore Engineering & Construction (OEC) business, where the top line was down by just under a fifth to $3.5bn. However, the division’s contribution to group earnings shrunk by a comparatively modest 7 per cent. Margins improved because the Galkynysh gas-field development and the El Merk gas-processing facility moved into a less capital-intensive phase.
Over the course of the year, the group was able to expand its order backlog by over a quarter to a record $15bn. Management said that bidding opportunities remained strong, particularly for OEC projects in the Middle East and North Africa and the states of the former Soviet Union.
| PETROFAC (PFC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,370p | MARKET VALUE: | £4.7bn | |
| TOUCH: | 1,367-1,370p | 12-MONTH HIGH: | 1,607p | LOW: 1,080p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 575¢* | NET DEBT: | 36% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2009 | 3.7 | 438 | 105 | 35.8 |
| 2010 | 4.4 | 668 | 165 | 43.8 |
| 2011 | 5.8 | 681 | 159 | 54.6 |
| 2012 (restated) | 6.2 | 765 | 186 | 64.0 |
| 2013 | 6.3 | 789 | 191 | 65.8 |
| % change | +1 | +3 | +3 | +3 |
Ex-div:TBC Payment:23 May £1 = $1.67 *Includes intangible assets of $485m, or 140¢ a share | ||||
