Thursday 15 December 2016 5:55 pm

Petrofac’s share price suffers after warning of “challenging” trading year, despite profits being unaffected

Petrofac's share price closed down two per cent today to 892.5p after the firm said a "challenging" year of deferrals and cancellations had hit order intake at its main engineering unit.

The oil and gas services provider's stock traded down more than four per cent during the day, despite Petrofac's reassurance that full-year net profits are still in line with previous guidance.

The FTSE 250 firm is expected to bring in $410m (£324m) in net profit for the full year, after cutting 25 per cent of its staff and posting record revenues.

Although a better-than-expected net profit is due to come from the group excluding its integrated energy services (IES) arm, a $55m loss in the IES branch mostly driven by low oil and gas prices has kept profits from exceeding expectations.

However, an uptick in oil prices in the final quarter of the year has helped improve bidding activity for services contracts.

Debt at the company, which has exited contracts in Romania and Malaysia in the 2016 financial year, is expected to be "around $900m", at a flat level from June.

"2016 has been a challenging year for the industry," said Ayman Asfari, Petrofac group chief executive. "The deferral and cancellation of project tenders has contributed to significantly reduced order intake in our lump-sum business year to date.

"Our existing backlog continues to provide excellent visibility for group revenue next year and our bidding activity has increased during the last quarter of the year. We remain very focused on maintaining our cost competitiveness and discipline in a competitive market, and are well-positioned for a recovery in our core markets."