Laggan-Tormore delays hit Petrofac's profit

Petrofac's annual profit has plunged due to delays in getting production up and running at its Laggan-Tormore plant and the costs associated with it.

The FTSE 250 company said on Wednesday that for the calendar year, it made a net profit of $9m (£6.4m), down from $581m in 2014.

That excluded exceptional items and certain re-measurements of $358m, primarily due to lower oil and gas prices.

Not incorporating the losses from the Laggan-Tormore plant, the company would have made a net profit of $440m.

Petrofac said even though the operating environment remains challenging, it is looking to make $90m in annual savings by the end of 2016 while focusing on its core areas of strength, maintaining its bidding discipline and delivering sector leading margins.

It also highlighted its group backlog is up 10% to record levels of $20.7bn at the end of last year.

"Petrofac's core proposition is based on strong project execution, clear geographic focus, a disciplined approach to bidding and a sustainable, cost-effective structure,” said chief executive Ayman Asfari.

“These strengths have positioned Petrofac well in a very challenging period for the oil and gas industry.”

He said the results were adversely affected by the project on Shetland.

“However, we faced up to the exceptional challenges we encountered and honoured our commitment to our client.

“With the plant now successfully operational, these issues are finally behind us.”