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Saipem maintained the upward momentum in the top-line and margins as the management has been reassuring the market for the past year following the capital increase. H1 revenues reached €5.3bn, up by 28% yoy. EBITDA recorded a more impressive increase at 68% and was on track to achieve the company’s FY guidance. The working capital outflow of €121m due to the backlog review weighed on the half-year operating cash flow, which was still strong enough to cover the capex.
Companies: Saipem (SPM:BIT)Saipem S.p.A. (SPM:MIL)
AlphaValue
Net income at breakeven was a welcome development after a long sequence of negative results since Q3 FY19. Annual margins will remain in line with the Q1 (7.4%) as the onshore EPC business will lag. Working capital management positively contributed to cash flow thanks to the sound cash profile of projects. There are no plans to raise new debt currently due to the inauspicious market environment as the available cash covers the debt maturities until FY25 and new facilities worth €860m provide a g
A booming upstream investment market boosted Saipem’s order intake and revenues by a respective 86% and 53% in FY22. The diluting backlog review, higher net financial expenses, higher taxes paid on revenues, a significant negative contribution from equity investments and the closure of the Russian activities all led to a negative net result, preventing Saipem from enjoying a net profit in an auspicious market environment.
After a successful capital increase thanks to which Saipem reduced its net debt massively, the recovery gained momentum in Q3 with a healthy order intake and the timely execution of projects. With a 9M adjusted EBITDA of €536m already surpassing the previous guidance, Saipem is now guiding for €550m for the year-end.
No negative surprise this quarter, the results coming in slightly above consensus with an adj. EBITDA of €148m and an adj. net result of €-32m. Revenues increased by 49% qoq in the E&C Offshore division to €1.2bn, while the EBITDA margin improved by 30bps to 8.1% (EBITDA at €101m). The 2022-2025 targets were confirmed (with FY22 adj. EBITDA of €500m).
Companies: Saipem S.p.A. (0RPI:LON)Saipem S.p.A. (SPM:MIL)
One month after the update on the recap and FY21 release, the Q1 results were without incident (on the financials), which is a positive given the current context. The adjusted EBITDA stood at €145m, against guidance of >€500m for FY22, i.e. a good start to the year for Saipem. The management confirmed the guidance and the company has received the advances from Eni and CDP (€650m) as well as the liquidity facility from banks (€850m).
Reassuring update showing no further deterioration in the backlog, an outlook looking more realistic than the previous one, and a robust financing package supported by the existing shareholders. While we don’t know yet what will be the dilution, this package is enough to put the company in a solid financial position and allows Saipem to focus on project execution and delivery of the backlog. The negative is on cash generation, which will become meaningful only in 2025.
The stock is down 25% as the company revises its backlog and initiates discussions with lenders and main shareholders for financing support. Margins are deteriorating in E&C as the company struggles with the pandemic, increasing raw material costs, and supply chains. Not a good look for the CEO, who presented his strategy and guidance only three months ago.
The results were below consensus with revenues of €1.9bn and adjusted EBITDA of €-25m, and H2 guidance is lowered to revenues of c. €4.5bn, while net debt is guided for a €500m increase by end of FY22. Given the company’s recent issues, the short-term concerns logically take priority over the 2025 plan. It seems that Saipem will have to reassure first before being valued on what management says it will deliver by 2025.
Another difficult quarter with an EBITDA of €-266m, way below consensus. Saipem continues to suffer in its core divisions from delays in project execution, the suspension of Mozambique LNG and operational issues in offshore wind. This prompts management to discuss with its lenders as it will breach its financial covenants at the end of the year. A small positive is the updated outlook for revenues of €7.7-8.2bn, higher than our estimate of €6.4bn.
Double-whammy for the contractor, which posted results below consensus and is left with many unknowns in Mozambique. The pandemic continues to impact project execution with delays and rescheduling. In Mozambique, Saipem is in close cooperation with Total and is not in a position to evaluate its impacts on its financials for 2021. The contract is worth €4bn in Saipem’s backlog with €1.4bn for the rest of the year.
Q4 revenues improve 15% qoq, which only met the timid outlook provided in Q3, and margins are declining further as the company is having issues on a renewable project. Management commented that “2021 is certainly not yet a back-to-normal year” and did not provide any meaningful guidance, only that net debt is expected to rise with higher capex. The only bright spot is on the order intake with the award from Qatargas.
The group showed revenues improving by €200m qoq, with the activity picking up only in onshore E&C. The soft guidance was reiterated, the management expecting H2 to be substantially in line with H1, which we believed was too conservative at the time. With Q3 results now in, this no longer seems to be the case. On the positive side, the group has renegotiated its financial covenants.
The hit was harder than expected with postponements of contracts and slower activity. While management expects a gradual recovery in H2 and a “more normal 2021”, a cost savings programme has been launched to offset part of the postponements this year.
Companies: Saipem S.p.A.
The mere €15m of orders intake in drilling activities highlights the poor state of the services industry. Understandably, management has withdrawn its guidance and could not provide an updated one on the “continuing highly unstable environment”. However, the press release also mentioned “good future business opportunities”. If this is a way to spark enthusiasm, we believe it was unnecessary as it adds confusion.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Saipem S.p.A.. We currently have 0 research reports from 3 professional analysts.
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