The oil services group Saipem collapsed by 25% on the Milan Stock Exchange after issuing a severe warning. In question, a “significant deterioration in margins“on certain large long-term contracts, particularly in the field of E&C Onshore and offshore wind power. Management attributes this slide to the liabilities of the pandemic and the increase in the costs of raw materials and logistics.
A Saipem wind project (Source Company)
As a result, adjusted consolidated EBITDA for the second half of 2021 will be around €1bn lower than the forecasts communicated in October. Turnover for the period should fall to €3.5 billion, against the €4.5 billion forecast previously. The group’s 2021 financial statements “should be closed with losses greater than one third of the company’s equity, which triggers the application of article 2446 of the Italian Civil Code“, and forces management to open negotiations with its lenders. It has also asked its shareholders, ENI and CDP, to support the company in this process.
The Saipem stall
This bad news causes the fall of other files in the sector, in particular Subsea 7 (-4.5%), Technip Energies (-4%) or Tecnicas Reunidas (-2%). In the sector, large contracts can be a source of significant disappointment if they are not well managed. Saipem is clearly struggling in the wind sector.