Petrofac warns of wider full-year loss

In an update ahead of its results for the year to the end of September, the company said that having reviewed its portfolio, it is now recognising an additional EBIT reduction of $140m to $160m in its full-year statements for 2022.

"This comprises both incremental project costs and a cautious view of the quantum and timing of recognition of certain revenue claims that would have partly offset those costs," it said.

As a result, it now expects to report a full-year group EBIT loss of around $150m to $170m for 2022, including an EBIT loss of approximately $240m to $260m in the engineering & construction segment.

In its trading update in December, Petrofac had forecast a group EBIT loss of $100m and an E&C EBIT loss of $190m.

The company said that during the extended post-balance sheet period for its 2022 consolidated financial statements, management conducted a thorough review of the portfolio of contracts, associated outstanding contractual and commercial issues and opportunities to improve liquidity by accelerating working capital inflows.

Chief executive Tareq Kawash said: "Petrofac’s focus is on completing legacy contracts as quickly, efficiently and safely as possible. We are taking steps to ensure the financial strength of the business by unlocking working capital and, where appropriate, balancing long-term value against near-term liquidity.

"Although we are disappointed to announce additional costs on these legacy contracts, in particular the Thai Oil Clean Fuels project, ongoing collaboration with clients and partners will de-risk future delivery."