ROME: Italian oil contractor Saipem may have to make more cost cuts its chief executive warned on Wednesday as it strives to meet a commitment to stick to its profit forecasts for 2016.
Saipem, controlled by oil major Eni and state fund FSI, completed a 3.5 billion euro rights issue earlier this month and is targeting cost cuts of 1.5 billion euros ($1.6 billion) and job cuts of 8,800 to help it lift profit margins.
Despite the fourth quarter falling short of analysts’ estimates, CEO Stefano Cao said he was able to confirm Saipem’s own forecasts for 2016, thanks to contracts that were already on its books, with 74 percent of revenues covered by these orders.
Saipem has said it expects net profit of around 300 million euros in 2016, on revenues of more than 11 billion euros. It expects earnings before interest and tax (EBIT) of more than 600 million euros.
The company, which employs some 45,000 people, is a market leader in subsea work including the world’s most expensive oil field, Kazakhstan’s Kashagan. Cao, a former executive at Eni, said there could be further cuts on the way, including the scrapping of some of the vessels in its fleet. Oil service companies around the world are finding business tough as global crude prices slide, prompting oil companies to cut back on spending.
