Reuters: Hot Stocks: UPDATE 1-Saipem beating contract target at better margins

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UPDATE 1-Saipem beating contract target at better margins May 21st 2013, 14:44 Tue May 21, 2013 10:44am EDT * Saipem won 6.1 bln euros in contracts since Jan * Margins better than 2012 contracts * Saipem credibility damaged by previous profit warning * Shares up more than 4 pct (Releads, adds CEO comment, analysis, shares) MILAN, May 21 (Reuters) - Italian oil services company Saipem SpA said it had secured more than half its new contract target for the year, and at higher margins than in 2012, giving it a boost as it attempts to recover from a profit warning earlier this year. Shares in Europe's biggest oil services group, which had lost more than 27 percent since the start of the year, rose on the statement and were up 4.2 percent at 22.4 euros by 1419 GMT, while the European oil sector was up 0.4 percent. The company said new contracts won since January by its Engineering & Construction unit totaled about 6.1 billion euros ($7.8 billion), putting it on track for a total of around 11 billion for the year. "The E&C contracts won since January have margins of 40 percent, which is higher than those of contracts won in 2012," Chief Executive Umberto Vergine said. Saipem shocked investors at the end of January when it slashed profit forecasts and painted a bleak outlook for 2013, blaming lower margins on new contracts. Net profit this year is expected to be around 450 million euros, compared with about 900 million euros in 2012. "This is good news for the company and we're starting to see some improvement in margins. But the profit warning damaged (the company's) reputation and it's going to take a few quarters to bring confidence back," a Milan analyst said. Saipem, 42 percent controlled by oil major Eni, is embroiled in judicial investigations into contracts in Algeria. The company has said that in a worse case scenario it could lose up to 500 million euros in payments on work in Algeria. Analysts have also expressed concern the group could face a fine. ($1 = 0.7778 euros) (Reporting by Stephen Jewkes; Editing by Danilo Masoni and David Holmes) Link this Share this Digg this Email Reprints

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