Italian multinational Saipem released a profit warning this week, revoking its previously positive outlook from October last year in what it says has been a “significant deterioration” in profit margins as a result of the pandemic’s ongoing impacts and higher raw material costs.
As compared to its October outlook, the group’s “contraction of consolidated revenues” for the second half of 2021 was reduced from €4.5bn to €3.5bn, with statutory financial statements from 2021 anticipated to show a loss of more than a third of the company’s equity.
In addition, initial estimations found consolidated adjusted core earnings for the second half of 2021 were down by around €1bn compared to the figure given in the October findings.
The company’s board of directors met over the weekend to discuss the findings and, in a statement on the matter, Saipem said that it had entered talks with main shareholders Eni and state lender CDP to consider support for “an appropriate and timely financing package”.
The shareholders responded by saying that they were “carefully monitoring” the situation and would carry out assessments together.
Talks have also been entered with banks to discuss the potential impacts of these losses on Saipem’s outstanding loan agreements.
The news follows what seemed like a promising start to the year for the group, with Saipem receiving offshore contracts in Australia and Guyana worth $1.1bn in the first few weeks of January, as well as an agreement with Tenaris for a carbon capture project in Italy.
However, Saipem’s struggle to rebound from the pandemic’s impact on oil and gas demand has put its plans to expand into green technologies – such as offshore wind, carbon capture, and hydrogen – into doubt.
Exact results from the financial review are still pending, however once they are confirmed the board of directors says it will call a shareholders’ meeting and take “the appropriate measures according to law”.