Petrofac slumps despite upbeat growth targets

PETROFAC said yesterday it is confident it will deliver full-year profit growth of “at least” 15 per cent in 2012, despite the award of several contracts being delayed.

Net profit for the international oil and gas company was up 32 per cent to $325.3m (£207.3m) in the first half of the year, with the dividend up 21 per cent to 21 cents per share.

Despite the upbeat figures, the stock slumped by more than five per cent yesterday, due to warnings of delayed contracts and lower profit growth in the second half of this year.

The oil giant said contracts would be delayed in its onshore engineering and construction projects in the Middle East, due in part to the unrest in several nations.

The delayed work is focused predominantly in Iraq, Saudi Arabia and Kuwait. Despite the setbacks, Petrofac is confident that it can double its 2010 earnings by 2015.

Tim Weller, chief financial officer, said he is confident that the contracts will come through by early next year.

“The customers are fully intent on awarding the contracts, it’s just taken them longer to go through their appraisal activity and their decision making around who to award the contracts to,” he said.

The slowdown in contract awards is difficult to attribute to just one factor, he added.

“The upside of that means that 2013 is likely to be a bumper year in terms of contract awards, so if you like, every cloud has a silver lining.”