TIDMPFC
RNS Number : 9803M
Petrofac Limited
15 May 2020
PETROFAC LIMITED
AGM STATEMENT
Petrofac Limited ("Petrofac" or "the Company") is today holding
its Annual General Meeting. In an update to shareholders, Chief
Executive Ayman Asfari will comment:
"In this unprecedented period, we are working tirelessly to
safeguard the interests of all our stakeholders . We have
implemented stringent health measures to protect our people,
clients and suppliers. We are working hard to mitigate the
disruption caused by COVID-19 on project progress and lower oil
prices on our bidding pipeline. And we have taken swift and
decisive action to significantly reduce costs, retain our
competitiveness and preserve the strength of our balance sheet.
"Throughout this period, I have been overwhelmed by the
dedication and commitment of my colleagues in taking the tough
decisions necessary to best position Petrofac to weather this storm
and to emerge stronger when markets recover."
Rene Medori, Chairman, will also comment:
"This is the first year the Board will not have the opportunity
to meet fellow shareholders in person, a necessary precaution to
protect health at the current time. Nevertheless, I want to thank
our shareholders, clients and other stakeholders for their
continued support in these challenging times. Whilst the outlook
remains unclear, the Board is fully supportive of the steps
management are taking to preserve shareholder value."
UPDATE ON MARKET CONDITIONS AND OUR RESPONSE
COVID-19 has caused significant disruption to our Engineering
and Construction (E&C) projects due to stringent health
protocols, supply chain disruption, travel restrictions and
Government-enforced lockdowns. Whilst projects are still
progressing, this has inevitably resulted in material delays in
construction activity, which will not be recovered in 2020.
Operations and maintenance activity in our Engineering &
Production Services (EPS) business continues in all regions, albeit
travel and social distancing restrictions are having a modest
impact on activity levels and our training centres have been
temporarily closed.
In addition, the collapse in oil prices has been the catalyst
for clients to review their future investment plans. This is
evident in delays to current tenders in E&C, as well as the
recent termination of the US$1.5 billion Dalma contract. Whilst our
bidding pipeline remains healthy and we are well positioned on
several opportunities this year, we are now prudently anticipating
that the majority of 2020 tenders will be delayed until 2021.
Contract extensions in EPS, on the other hand, have remained strong
with US$500 million of new orders secured year to date.
In order to mitigate the impact of the COVID-19 pandemic and
lower oil prices on financial performance and order intake, we are
taking action to reduce costs, retain our competitiveness and
preserve the strength of our balance sheet. We are targeting
additional savings to those announced on 6 April, and now expect to
reduce overhead and project support costs by at least US$125
million in 2020 and by up to US$200 million in 2021. In addition,
suspension of the final 2019 dividend payment and a 40% reduction
in capital investment has conserved an incremental US$145 million
of cash flow.
Looking ahead, it remains unclear how long COVID-19 and low oil
prices will continue to disrupt business activity and impact
business performance. Notwithstanding this, we have a healthy order
book of secured revenue, a strong balance sheet, liquidity of
US$1.2 billion (1) and we have taken immediate action to reduce our
costs and protect our financial position. We believe that these
factors, together with a capital light business model and a strong
competitive position in the Middle East where the cost of
production is low, will protect us against near term headwinds.
Our next market update will be the pre-close trading statement
on our first half trading on 25 June.
ENDS
Notes
(1) Gross liquidity of US$1.2 billion as at 30 April 2020
consisted of gross cash of $0.7 billion and $0.5 billion of undrawn
committed facilities.
(2) Net debt was US$241 million as at 30 April 2020 and
comprised interest-bearing loans and borrowings less cash and
short-term deposits (i.e. excludes IFRS 16 lease liabilities).
Disclaimer:
This announcement contains forward-looking statements relating
to the business, financial performance and results of Petrofac and
the industry in which Petrofac operates. These statements may be
identified by words such as "expect", "believe", "estimate",
"plan", "target", or "forecast" and similar expressions, or by
their context. These statements are made on the basis of current
knowledge and assumptions and involve risks and uncertainties.
Various factors could cause actual future results, performance or
events to differ materially from those expressed in these
statements and neither Petrofac nor any other person accepts any
responsibility for the accuracy of the opinions expressed in this
presentation or the underlying assumptions. No obligation is
assumed to update any forward-looking statements.
This announcement contains inside information which is disclosed
in accordance with the Market Abuse Regulation.
For further information contact:
Petrofac Limited
+44 (0) 207 811 4900
Jonathan Yarr, Head of Investor Relations
jonathan.yarr@petrofac.com
Aaron Clark, Investor Relations & Communications Manager
aaron.clark@petrofac.com
Tulchan Communications Group
+44 (0) 207 353 4200
petrofac@tulchangroup.com
Martin Robinson
LEI 2138004624W8CKCSJ177
NOTES TO EDITORS
Petrofac
Petrofac is a leading international service provider to the
energy industry, with a diverse client portfolio including many of
the world's leading energy companies.
Petrofac designs, builds, manages and maintains oil, gas,
refining, petrochemicals and renewable energy infrastructure. Our
purpose is to enable our clients to meet the world's evolving
energy needs. Our six values - safe; ethical; innovative;
responsive; quality & cost conscious; driven to deliver - are
at the heart of everything we do.
Petrofac's core markets are in the Middle East and North Africa
(MENA) region and the UK North Sea, where we have built a long and
successful track record of safe, reliable and innovative execution,
underpinned by a cost effective and local delivery model with a
strong focus on in-country value. We operate in several other
significant markets, including India, South East Asia and the
United States. We have 11,500 employees based across 31 offices
globally.
Petrofac is quoted on the London Stock Exchange (symbol:
PFC).
For additional information, please refer to the Petrofac website
at www.petrofac.com
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END
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