Petrofac winning new business and cutting debt

New order intake has grown to $5.0bn so far in 2018, up from $3.3bn at the half-year stage.

The FTSE 250 group's backlog of work stood at $10.2bn as of 30 November, flat compared to a year ago and up from $9.7bn at the half-year.

Of the backlog, $7.8bn was in engineering & construction (E&C) and $2.4bn in engineering & production services (EPS).

Chief executive Ayman Asfari said the business was on course to report "good results", with the new order intake in both core and growth markets reflecting the company's "competitiveness in a market that has seen some delays in contract awards".

Indeed, Petrofac's update comes a day after sector peer Hunting sounded a note of caution over its 2019 outlook with the possibility of deferred orders, adding that said “some market softness” had been observed within businesses focused on US onshore operations.

Petrofac, which has been under investigation by the Serious Fraud Office for more than 19 months for suspected bribery, corruption and money laundering, has won $3.8bn of new orders in E&C year to date. Of these new wins, US$2.2bn were in growth markets, including the Thai Oil refinery project in Thailand, three projects in India and an offshore wind project in The Netherlands.

In EPS, there has been $1.2bn of contract awards and extensions in the year to date, predominantly in the UK, Oman, Turkey and Iraq.

The company is currently bidding on more than $15bn of tenders scheduled for award in the first half of 2019.

After around $0.5bn of net proceeds from disposals and divestments, net debt is expected to be around $250m at the year-end, down from $0.6bn a year ago. Lower capital expenditure and a working capital inflow in the second half have also been key contributions.

Asfari said the divestments were part of the transition "back to a capital light business".

Said Asfari: "Looking forward, we remain focused on securing new orders, delivering operational excellence and maintaining a strong balance sheet. We are well-positioned with a differentiated offering, good backlog and revenue visibility, and high levels of tendering for award in 2019."

Shares in Petrofac, which after taking an extra leg lower at the start of the week had lost almost a third since the start of October, were up 5% to 468.07p on Tuesday.