Saipem: results for the first quarter of 2021

Recent events in Mozambique

On 26 April 2021, Total issued a press release declaring the force majeure on the Mozambique LNG project, considering the evolution of the security situation in the north of the province of Cabo Delgado in Mozambique.
Following the recent suspension of activities and the press release issued by Total, evaluations are underway in close cooperation with the client to preserve the value of the project.
While awaiting for further instructions and the outcome of the ongoing assessments between the parties, currently Saipem is not in a position to evaluate impacts on its financials for 2021 and therefore to confirm or update the business scenario provided to the market on 25 February 2021.
The market will be promptly updated when the situation becomes sufficiently clear and impacts can consequently be determined by the company.
As of 31 March 2021, the project is included in Saipem backlog for an amount of around €4 billion, of which approximately €1,4 billion euro related to activities from 1 April to year-end 2021. 

Covid-19

Saipem, for which people's health remains the top priority, continues to monitor the persistent emergency situation and is promoting, on a voluntary basis, the vaccination process of its employees worldwide.
Specifically, in Italy the company has launched the anti-Covid-19 vaccination campaign for its employees, still on a voluntary basis, which will be carried out by healthcare professionals at expressly dedicated and equipped company facilities.
At present, out of a total of around 32,000 employees, the percentage of Saipem people who tested positive to Covid-19 has been around 11%, 7% of which are still infected and constantly monitored by the company.

Highlights of the first quarter

• Good level of new contract awards of approximately €1.6 billion, in line with revenues for the period
• Backlog still at a record level of over €25 billion1 (78% of the E&C portion non-oil-related), increased compared with the first quarter of 2020, ensuring solid support to the evolution in the medium to long term
• Operating results of the first quarter, with revenues of approximately €1.6 billion and an adjusted EBITDA margin of 5.4%, reflect a slowdown and a rescheduling of project execution activities, in a context of a persistent health crisis and geopolitical tensions in Mozambique
• On a divisional level:
  1. Offshore E&C factors slowdowns in activities and the effects of the delay of new contract acquisitions
  2. Onshore E&C volumes decrease with respect to the fourth quarter of last year, albeit with a resilient margin compared with the first quarter of 2020
  3. Offshore drilling revenues and margins increase compared with the fourth quarter of 2020, while onshore drilling revenues are substantially in line with reduced margins
• Net debt pre IFRS 16 increase to €1.1 billion (approximately €1.45 billion post IFRS 16); a trend in line with the expectations anticipated at year-end 2020 results
• Liquidity increased at €2.5 billion thanks to the €500 million 7-year fixed-rate bond successfully issued in March 2021
• Sizeable commercial opportunities, also diversified in the green and sustainable mobility infrastructure sectors
• Extended for 3 years (plus 3 additional optional years) the Long-Term Agreement (“LTA”) frame agreement with Saudi Aramco for conventional offshore E&C activities related to further development plans of existing fields in the Kingdom. Four work orders were also awarded for a total amount for Saipem of around $450 million, which will be included in the backlog in the second quarter

Stefano Cao, Chief Executive Officer, commented:

“The results of the first quarter of 2021 are inevitably affected by the overall economic context, which is still heavily impacted by the pandemic crisis, by the slowdown of E&C activities in some projects and by the recent events in Mozambique. Over these years, Saipem has demonstrated resilience and adaptability in dealing with complexity in challenging scenarios. In a continuously evolving market, the company has solid fundamentals to face at best future challenges”.