Unlike the oil and gas clients it services, much of Petrofac 's (PFC) valuation is decided when it talks to the market. Along with changes in the way the company recognises its huge, long-term contracts, investors parse results for hints on the prospects for the order book.
On this count, the FTSE 250 group's full-year results delivered. The award of a $600m (£482m) three-year gas contract in Oman at the end of the period helped to increase the overall new order intake up to $1.9bn, in turn pushing the backlog up to $14.3bn and providing good earnings visibility for the coming year. It is encouraging then that, from this baseline, "bidding activity has increased" and Petrofac has a "good pipeline of opportunities".
Of course, commodity prices matter as well, particularly as Petrofac's upstream division produced 20.9m barrels of oil equivalent in 2016. That was 13 per cent lower than the comparable period, which together with an average oil price of $44 a barrel meant the integrated energy services division lost $42m, a figure more than compensated by the strong turnaround in the core engineering and construction division.
Prior to these results, market consensus estimates were for $496m pre-tax profit and 116¢ adjusted EPS in 2017, falling to $450m and 110¢ in 2018 as older projects fall away.
PETROFAC (PFC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 899p | MARKET VALUE: | £3.11bn | |
| TOUCH: | 899-900p | 12-MONTH HIGH: | 1,016p | LOW: 635p |
| DIVIDEND YIELD: | 5.9% | PE RATIO: | 3856 | |
| NET ASSET VALUE: | 317¢ | NET DEBT: | 55% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 6.20 | 765 | 186 | 64.0 |
| 2013 | 6.30 | 789 | 191 | 65.8 |
| 2014 | 6.24 | 171 | 35.1 | 65.8 |
| 2015 | 6.84 | -335 | -103 | 65.8 |
| 2016 | 7.87 | 100 | 0.3 | 65.8 |
| % change | +15 | - | - | |
Ex-div: 20 Apr Payment: 19 May £1=$1.24 | ||||
