Saipem to cut costs, focus on offshore business after swinging to core loss

MILAN (Reuters) -Italian energy services group Saipem pledged on Thursday to cut costs and focus more on its traditional offshore business after it reported a swing to a core operating loss for the last year.

Saipem said its adjusted core earnings, or EBITDA, were negative to the tune of 1.192 billion euros ($1.34 billion). That compares to a Refinitive Smartestimate for a loss of 891 million euros.

Saipem had stunned investors in January when it downgraded earnings by a billion euros due to a significant deterioration of margins on some contracts, including offshore wind.

The company, controlled by energy group Eni and state lender CDP, said on Thursday an audit of around 80% of its order backlog showed there was no other impact from contracts.

It added that after stripping out the problem contracts, adjusted core earnings in the fourth quarter would have been 120 million euros instead of the reported loss of 901 million euros.

The contractor confirmed it would present a new revised business plan on March 16, which will include a capital increase and debt restructuring.

“Discussions continue in a constructive way with the shareholders,” Saipem said.

Besides cost-cutting and a more selective approach to business, Saipem said it would sell assets to generate cash to help fund its 2022-25 plan.

($1 = 0.8892 euros)

(Reporting by Stephen Jewkes; editing by Uttaresh.V)