Petrofac’s engineering and construction (E&C) business has reported drop in earnings before interest and tax (EBIT) to $44m in the first half of 2022, compared with $21m in the same period in 2021.
The EBIT loss of $44m reflected the “immediate recognition” of the additional Covid-related project costs to completion and the adverse impact of operating leverage from lower revenue, the company said.
Petrofac’s engineering and construction (E&C) business includes offshore wind activity.
Petrofac said E&C financial performance in the first half was in line with the guidance given in the trading update, reflecting the lingering effects of the pandemic, including some “relatively unfavourable” commercial settlements with clients.
Revenue for the first half of 2022 was down 40% to $700m, compared with $1.1bn in the first half of 2021.
The decline in revenue reflected lower levels of activity compared with the prior year period as well as progress delays on certain projects.
The E&C pipeline includes $7bn relating to New Energy Services, of 70% relates to offshore wind where.
Petrofac said that through the collaboration with Hitachi, it is “well positioned” to compete on a large number of HVDC offshore wind opportunities in Germany and the Netherlands.
Petrofac’s E&C business had $200m in new order intake in the first half of this year and also has $600m of backlog scheduled for execution in the second half of 2022.
For the other new energies sectors, the company has applied a risk factor to the pipeline to reflect that they are less mature and the timing of awards is uncertain.
In the second half, subject to the outcome of commercial settlements, E&C expects to report a marginal EBIT profit.