Saipem has confirmed negative earnings of over €1bn resulting from “increased difficulties” due in part to some offshore wind projects that emerged with the company’s backlog review.
In January the Italian marine engineering outfit withdrew its outlook for the year and revised its order backlog due to “significant deterioration” in margins, including in offshore wind.
It has since completed a review that covered a total of 22 projects, which represent around 80% of the total consolidated backlog as of 30 September 2021, or around 88% of the consolidated backlog of the E&C segments as of the same date.
In an announcement today Saipem stated it is “repositioning on low-risk offshore wind business in 2022-23” and is adopting a renewed commercial and execution strategy to capture market growth potential in the second half of the company’s Strategic Plan, 2022-2025.
Saipem’s board had also approved the guidelines of the review of the plan initiated following the backlog review.
The completed review has not shown any additional impact from what was communicated on 31 January 2022.
Full year 2021 preliminary results were significantly impacted by the fourth quarter, which reported a negative management accounts consolidated adjusted EBITDA of €901m, affected by a negative impact of €1bn, resulting from “increased difficulties on certain specific offshore wind and onshore E&C projects that emerged with the backlog review”.
This, in accordance with the international accounting standards, led to the recognition in the fourth quarter of the bulk of the cost increase and lower overall revenues, expected in future years on these specific projects until their completion.
Excluding the impact described above, management accounts consolidated adjusted EBITDA in the fourth quarter would have been positive by approximately €120m, confirming the “overall strength” of the portfolio of activities managed by Saipem, supported by the results of drilling and offshore E&C, excluding wind.
The updated 2022-25 Strategic Plan and the financing package will be proposed for approval at the board of directors on 15 March 2022.