Technip expects lower subsea profit margins in 2014 after early dip
BY TARA PATEL
PARIS (Bloomberg) -- Technip SA, Europe’s largest oilfield-services provider by market value, expects a lower profit margin in the subsea division next year after it dips to an “exceptionally low” level in the first quarter.
The subsea operating margin will fall to about 5 percent before a “rebound” that will take it to at least 12 percent for the full year, the company said in a statement. Technip has forecast a 14 percent margin for the division in 2013.
The French company, which missed third-quarter analyst profit estimates, has amassed a record order book as oil companies invest in pipes and platforms to explore for new reserves and develop production from hard-to-reach fields. Executive Officer Thierry Pilenko said business was “contrasted” in the third quarter and blamed foreign-exchange rates for curbing profit.
Factors weighing on profits in early 2014 include additional time needed for a vessel maintenance program, a high proportion of multi-year contracts with no margin recognized in the early phases, and the startup of the Acu plant in Brazil, it said in the statement.
“These elements will be much less important” in the second quarter, Technip said. Subsea margins will rise to between 15 percent and 17 percent in 2015.
Technip today forecast onshore/offshore operating margins next year of 6 percent to 7 percent compared with a forecast of 6.5 percent to 7 percent this year.
The division will have “modest” growth in sales and “stability” for margins in 2015, Technip said.