Saipem: results for the third quarter and the first nine months of 2022

San Donato Milanese, October 27, 2022 – The Board of Directors of Saipem SpA, chaired by Silvia Merlo, approved yesterday the consolidated interim management report of the Group as of September 30, 2022 (unaudited).

 

Highlights of the third quarter and first nine months of 2022

As a result of the announced sale of the Onshore Drilling business, the results of the segment being divested were recognised as discontinued operations in accordance with the provisions of IFRS 5. The comparative periods have been restated in accordance with this accounting treatment in all parts of this release.

 

For comparative purposes, the main figures are shown below with reference to both the scope including discontinued operations and continuing operations only.

• Revenues: €7,441 million, including revenues from discontinued operations, +47% compared to the first nine months of 2021; revenues from continuing operations of €7,043 million +46%.
• Adjusted EBITDA: €536 million, including discontinued operations, equal to 7.2% of revenues compared to a loss of €291 million in the first nine months of 2021; adjusted EBITDA from continuing operations of €445 million, equal to 6.3% of revenues.

• Net result: loss of €138 million (loss of €1,121 million in the first nine months of 2021).
• Capital expenditure: €211 million, including discontinued operations compared to €195 million in the first nine months of 2021; capital expenditure in continuing operations of €184 million.

• Net debt post IFRS-16: €426 million (€1,541 million as of December 31, 2021).
• Net debt pre IFRS-16: €88 million (€1,223 million as of December 31, 2021).
• Order intake: 7,595 million including discontinued operations; acquisitions continuing operations of €6,924 million.
• Backlog: €22,707 million including discontinued operations (€23,252 million including the backlog of non-consolidated companies); continuing operations backlog of €20,937 million (€21,482 million including the backlog of non-consolidated companies). The total order backlog of non-consolidated companies was reduced by €800 million during the third quarter, as a result of the cancellation of the activities falling within the sanctioning framework of the European Union against the Russian Federation.

 

 

 

Financial Highlights

(€ million)

third quarter 2021	second quarter 2022	third quarter 2022	third quarter 2022 vs third quarter 2021 (%)	Continuing Operations	first nine months 2021	first nine months 2022	Sept. 2022 vs Sept. 2021 (%)
1,779	2,363	2,856	60.5	Revenues	4,821	7,043	46.1
(86)	142	168	ns	EBITDA	(502)	412	ns
(48)	148	182	ns	Adjusted EBITDA	(344)	445	ns
(285)	25	54	ns	Operating result (EBIT)	(891)	81	ns
(152)	31	68	ns	Adjusted operating result (EBIT)	(638)	114	ns
(330)	(30)	(34)	(89.7)	Continuing operations net result	(1,069)	(157)	(85.3)
(197)	(24)	(20)	(89.8)	Continuing operations adjusted net result	(816)	(124)	(84.8)
(342)	(32)	(8)	(97.7)	Net Result	(1,121)	(138)	(87.7)
(206)	(23)	7	ns	Adjusted Net Result	(862)	(101)	(88.3)
(257)	(447)	(158)	(38,5)	Free cash flows	(376)	(773)	ns
1,394	1,395	88	(93.7)	Net debt pre-IFRS 16 lease liabilities	1,394	88	(93.7)
1,673	1,703	426	(74.5)	Net debt post-IFRS 16 lease liabilities	1,673	426	(74.5)
49	49	98	ns	Capital expenditure	172	184	7.0
404	1,945	2,696	ns	New contracts	4,620	6,924	49.9

* The results of the Onshore Drilling segment being divested, have been recognized as discontinued operations in accordance with the criteria set out in IFRS 5. The comparison periods have been restated for comparative purposes.

 

Revenues and associated profit levels are not consistent over time, as they are influenced not only by market performance but also by climatic conditions and individual project schedules in the Engineering and Construction sector, and by contract expiry and renegotiation timing in the Drilling sector.

 

Continuing and discontinued operations and non-current assets held for sale

The results of operations, financial position, and cash flows from the second quarter are represented, as well as overall, by distinguishing continuing operations from discontinued operations, by recognising the latter in accordance with IFRS 5.

The Onshore Drilling business is recognised in discontinued operations as of June 1, 2022, Saipem and KCA Deutag (‘KCA’) signed an agreement for the sale of the Onshore Drilling business (the ‘DRON’) for a consideration that includes a cash component of $550 million and a 10% of KCA’s class A ordinary shares. The transaction does not involve any transfer of debts from Saipem to KCA.

The DRON sale is in line with the 2022-2025 Strategic Plan, with a view to active management of the asset portfolio.

Considering that the above-mentioned transaction will take place in the fourth quarter of 2022, the sector contributes to results as “discontinued operation” in accordance with IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”.

In this press release, the Onshore Drilling business is represented as a “discontinued operation” under the provisions of IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”.

Therefore, the results of operations of the discontinued operation are presented separately from continuing operations in a single line in the income statement and limited only to transactions with third parties. The financial results for the comparison period have been presented again in accordance with the provisions of IFRS 5.

 

In addition, on June 27, 2022, Saipem and BW Energy signed a Memorandum of Agreement (MoA) for the sale, for $73 million, of the floating production, storage, and offloading (FPSO) unit Cidade de Vitória, currently owned by Saipem and managed operationally on behalf of Petrobras in the Golfinho field, off the coast of Brazil. In accordance with IFRS 5, this asset meets the criteria to be classified as held for sale and has been shown separately from other assets in the balance sheet.

 

Reorganisation: impact on reporting

From January 2022, the Company has implemented a new organisation with four business lines: Asset Based Services, Energy Carriers, Robotics and Industrialized Solutions, and Sustainable infrastructures, and consequently is adjusting its reporting structure in accordance with IFRS 8.

In order to facilitate the financial market’s understanding of the evolution of the economic/financial performance during 2022, the Company maintains, in continuity with previous years, the reporting structure based on the four divisions Engineering & Construction Offshore, Engineering & Construction Onshore, Drilling Offshore and Drilling Onshore, this choice derives also from the fact that the Company is completing the implementation of the management control system in line with the new organizational structure and as of today therefore the separate financial statement information is not available as required by IFRS 8.

 

Management update 2022 – continuing operations

In the first nine months of 2022, revenues amounted to €7,043 million (€4,821 million in the first nine months of 2021), and the adjusted EBITDA amounts to €445 million (a loss of €344 million in the first nine months of 2021). The improvement is recorded in all the activities, mainly driven by Offshore Engineering & Construction and drilling sectors, as commented below in the paragraph “Analysis by business sector”.

 

The adjusted net result from continuing operations amounted to a loss of €124 million (a loss of €816 million in the first nine months of 2021). The positive change recorded in adjusted operating result (€752 million) is reduced by the deterioration in the balance of tax and financial operations totalling €60 million.

 

The net result from continuing operations shows a loss of €157 million (loss of €1,069 million in the first nine months of 2021) and compared to the adjusted net result includes costs for COVID-19 healthcare emergency of about €15 million and reorganization expenses of €18 million.

 

The net result, including the net result from discontinued operations of €19 million, recorded a loss of €138 million.

 

Adjusted EBIT reconciliation – reported EBIT

                                                                                                                                            (€ million)

	Offshore E&C	Onshore E&C	Offshore Drilling	Total*
Adjusted EBIT	63	(29)	80	114
Costs for COVID-19 healthcare emergency	11	4	-	15
Re-organization expenses	6	12	-	18
Total special items	(17)	(16)	-	(33)
Reported EBIT	46	(45)	80	81

* Does not include charges from the health emergency of €1 million and reorganisation charges of €3 million from discontinued operations (onshore drilling).

 

In the corresponding period of 2021, net result from continuing operations recorded a loss of 1,069 million euros and compared to the adjusted net result included the following special items:

• partial impairment of three vessels and three logistic bases, which are expected to be disposed of over the course of the plan, and of the related working capital, for €113 million;
• contingent liabilities of €62 million, deriving from the resolution of a legal dispute relating to a long-completed project;
• costs deriving from the healthcare emergency for about €56 million. This amount included the costs incurred in the period directly attributable to the Covid-19 pandemic, such as costs for the resources on stand-by, in accordance with quarantine regulations and in cases where activities at operating sites and onboard vessels were suspended by the authorities, for the purchase of personal protective equipment and devices in addition to the standard requirements, for sanitising work areas and for the organisation of return charter flights for people;
• reorganization expenses of €22 million.

 

Capital expenditure in the first nine months of 2022, amounted to €184 million (€172 million in the first nine months of 2021), and was divided as follows:

• €83 million in Offshore Engineering & Construction;
• €17 million in Onshore Engineering & Construction;
• €84 million in Offshore Drilling.

 

Net debt as of September 30, 2022 pre IFRS-16 lease liability effects amounted to €88 million. Net debt including IFRS16 lease liability of €338 million amounted to €426 million.

Gross debt pre IFRS 16 lease liability effects as of September 30, 2022 amounted to €2,760 million, liquidity to €2,672 million of which available cash for €1,274 million.

 

Financing package

The subscription of the capital increase was completed on 15 July 2022 for a total amount of €2 billion fully paid and on 18 July 2022 the Company repaid the "SACE Facility" for the entire amount equal to €852 million.

For further details on the financing package, please refer to the press release of 27 July 2022.

 

Continuing operations backlog

In the first nine months of 2022, Saipem was awarded new contracts amounting to a total of €6,924 million (€4,620 million in the first nine months of 2021). The backlog as of September 30, 2022, amounted to €20,937 million (€7,266 million in Offshore Engineering & Construction, €12,874 million in Onshore Engineering & Construction, €797 million in Offshore Drilling), of which €2,171 million to be executed in 2022.

The backlog including non-consolidated companies as of September 30, 2022, amounted to €21,482 million (€7,277 million in Offshore Engineering & Construction, €13,408 million in Onshore Engineering & Construction and €797 million in Offshore Drilling), of which €2,411 million to be executed in 2022. The non-consolidated backlog was reduced by €800 million during the third quarter, as a result of the cancellation of the activities falling within the sanctioning framework of the European Union against the Russian Federation.

 

Other information

 

Appointment of a new Board Director by co-optation

The Board of Directors of the Company met yesterday and, having received the opinion of the Compensation and Nomination Committee and with the approval of the Board of Statutory Auditors, appointed by co-option, pursuant to art. 2386, paragraph one, of the Italian Civil Code, Mr. Davide Manunta as non-executive and non-independent Director. Mr. Manunta was also appointed member of the Sustainability, Scenarios and Governance Committee.

 

As disclosed to the market on August 31, 2022, on that day and following the resignation of the Director Pier Francesco Ragni, Saipem’s Board of Directors appointed Mr. Alessandro Puliti as Board Director, by co-optation pursuant to art. 2386 of the Italian Civil Code.  Also on August 31, 2022, following the resignation of Mr. Francesco Caio (then CEO and General Manager of the Company), the Board of Directors appointed Mr. Alessandro Puliti as CEO and confirmed him in his position as General Manager.

In light of the above, the composition of the Board of Directors had to be integrated and the number of its members brought to nine, as set by the Shareholders' Meeting on April 30, 2021.

The invitation to consider the candidacy of Davide Manunta (currently Head of Energy & Construction of CDP and CDP Equity SpA and Head of Finance, Planning & Control of CDP Reti SpA) for the independent review by the Board of Directors of Saipem SpA, was communicated to the Company by the shareholder CDP Industria SpA (and for information to the shareholder ENI SpA) through a letter sent on September 30, 2022.

Based on his declarations, the new Director Davide Manunta does not possess the requirements of independence and does not hold shares in the Company. His curriculum vitae is published on the Company's website at www.saipem.com, under the "Governance" section.

 

Transfer of Registered Office

At the same meeting, the Board of Directors of the Company, under the powers granted by art. 20 of the Articles of Association, approved the transfer of the Registered Office of Saipem SpA from Via Martiri di Cefalonia, 67 in San Donato Milanese, to Via Luigi Russolo, 5 in Milan. Notice will be given in due course of the registration of this transfer in the Register of Companies, and of the publication of the updated Articles of Association.

 

***

This press release should be read in conjunction with the Interim Consolidated Financial Statements as of June 30, 2022 and the Consolidated Financial Statements as of December 31, 2021 of Saipem SpA, which are already available on the Company’s website (www.saipem.com), under the section “Investor Relations /Financial information”.

***

Paolo Calcagnini, Chief Financial Officer declares pursuant to Article 154a(2) of the Consolidated Law on Finance that the accounting information corresponds to the documentary results, books and accounting records.

 

Forward-looking data and information must be considered “forward-looking statements” and, therefore, not based on mere historical facts, by their nature have a component of risk and uncertainty, given that they also depend on the occurrence of future events and developments outside the control of the Company, such as: changes in exchange rates, changes in interest rates, volatility in commodity prices, credit risk, liquidity risk, HSE risk, investments in the oil industry and other industrial sectors, political instability in areas where the Group is present, competitive actions, success in commercial negotiations, the risk of project execution (including those relating to investments in progress), the Covid-19 pandemic evolution (including its impacts on our business, our projects running around the world and our supply chain), as well as changes in the expectations of stakeholders and other changes in business conditions. Actual results could therefore differ materially from the forecasts. The financial reports contain in-depth analyses of some of the aforementioned risks. Forward-looking statements and data are to be considered in the context of the date of their release.

 

Conference call and webcast

The results contained in this press release will be presented today at 10:00AM Italian time during a conference call and webcast by CEO Alessandro Puliti and CFO Paolo Calcagnini. The conference call can be joined by webcast, via the Company’s website www.saipem.com, by clicking on the banner ‘NINE MONTHS 2022 RESULTS’ on the home page, or following the URL https://edge.media-server.com/mmc/p/w33vtx2e.

 

A presentation will be illustrated during the webcast conference call, which can be downloaded, approximately 30 minutes before the scheduled start time from the webcast window or from the "Investor Relations/Quarterly Results and Documentation/Archive" section of www.saipem.com. The presentation will also be made available at the authorized storage mechanism "eMarketSTORAGE" (www.emarketstorage.com) and on the website of Borsa Italiana SpA (www.borsaitaliana.it).

 

Saipem is an advanced technological and engineering platform for the design, construction and operation of complex, safe, and sustainable infrastructures and plants. Always oriented towards technological innovation, Saipem is today committed to working alongside its customers on the frontier of the energy transition with increasingly digital means, technologies and processes oriented from their conception to environmental sustainability. It is listed on the Milan stock exchange and operates in over 70 countries around the world with 32 thousand employees from 130 different nationalities.

 

Website: www.saipem.com
Phone: +39 0244231

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