Saipem beats expectations as core energy business gets boost

MILAN (Reuters) -Italy’s Saipem beat expectations for first-quarter earnings as an upturn in global oil and gas spending lifted the energy contractor’s core business, putting it on track for a better year.

Adjusted core earnings in the period rose 65% to 145 million euros ($157 million), above a Refinitiv consensus of 103 million euros, Saipem said on Thursday. Orders in the three months were up 48% at 2.36 billion euros.

The results come a month after the company announced a 2 billion euro capital increase in a rescue plan that scaled back its green ambitions to focus on more traditional oil and gas business.

A global rush to secure more oil and gas after Russia’s invasion of Ukraine is reshaping energy markets and creating opportunities for energy service firms.

“Results are confirming the good momentum in investments in oil and gas in the market… particularly for our offshore activities,” Saipem Chief Executive Francesco Caio said in a call with analysts.

Saipem, a market leader in subsea engineering and construction (E&C), had been looking to develop new lines of business to meet an increasing customer focus on green technologies.

But steep losses on offshore wind projects that helped drag the group into the red last year have led it to take more time on making the transition.

The company, which last year posted an adjusted core loss of 1.2 billion euros, stuck to its guidance for earnings of more than 500 million euros this year.

The results provided positive signs in terms of margin recovery, Italian broker Bestinver said on Thursday. The guidance “can be considered prudent”, it said.

At 1250 GMT Saipem shares were up 12.6%.

Besides the capital increase which is expected to be launched some time this year, Saipem also expects to raise more than 1.5 billion euros from asset sales.

Chief Operating Officer Alessandro Puliti said the aim was to have an agreement in place for the sale of the group’s onshore drilling business by the end of May.

Puliti, a former top manager at Eni, also said Saipem’s involvement in two projects in Russia would cease by the end of May.

($1 = 0.9221 euros)

(Reporting by Francesca Landini and Stephen Jewkes; Editing by Jan Harvey)