Petrofac share price rises despite first half loss as Shetland Islands rack up

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Petrofac shares were up 2.3 per cent up in early morning trading, despite having posted a loss for the first half of 2015 thanks costs at its Laggan-Tormore project.

The figures

Having issued a profit warning last November, Petrofac reported revenues of $3.2bn (£2.1bn) for the six months to the end of June, 25 per cent higher than the same period last year.

Read more: Petrofac share price soars despite £30m costs on North Sea project

However, it made a net loss of $133m for the first half, compared with net profit of $136m in the same period last year, which was partly attributable to a $263m hit it took on its Laggan-Tormore project in Shetland.

New orders stood at $6bn, while the company maintained interim dividend at 22 cents per share.

Why it's interesting

Petrofac’s Laggan-Tormore project, off the Shetland Islands, continues to drag down financial performance, with the company having said tough operating conditions and the threat of strikes by workers causing it to incur a $236m (£150m) loss so far this year.

In the statement, the company said: "On Laggan-Tormore, commissioning is well underway, with major systems handed over to the client; first gas is now expected in the fourth quarter of 2015 with additional costs recognised of around £30m in relation to final completion, pre-commissioning and commissioning activities."
 
Read more: Petrofac share price falls 13 per cent amid costs hike

The company added that profits will be weighted towards the second half of the year due to phase delivery.

Petrofac assured investors it is in a "strong position" against "the backdrop of a challenging environment". The overall portfolio "remains in good shape, with embedded margins consistent with guidance, and we continue to see a healthy pipeline of bidding opportunities", the company added.

What Petrofac said

Ayman Asfari, Petrofac's group chief executive, said:

Our clients are continuing to invest in large strategic projects in our core markets, where we have an unrivalled track record and a very cost-competitive delivery capability.

We continue to drive operational efficiencies to maintain our cost-competitiveness and we are working with our clients to address cost pressures and generate value for them whilst protecting our margins.

In short

The commodities crisis continues apace – although part of Pertrofac's woes are down to costs associated with its Shetland Islands project.