By Liam Moloney
Saipem SpA (SPM.MI), the Italian services company that lost more
than a third of its value last week after cutting its guidance,
Thursday said it expects to recover profitability next year as it
predicts it will signs higher-margin contracts.
Chief Executive Umberto Vergine, speaking on a conference call,
said the company forecasts the next contracts it will win will show
better margins than those signed in the 2009-2010 period when
competition was extremely high.
These new contracts will "filter in" in 2014 results, said Mr.
Vergine, who specified that the uncertainty of timing of the new
large projects is what hit the company. "We are seeing the start of
a recovery."
Saipem has been in the spotlight in recent months after it
announced in December that the Milan-based company, which is
controlled by Eni SpA (E, ENI.MI), was being investigation by Milan
prosecutors over possible corruption involving some Algerian
contracts. Saipem denied any wrongdoing.
Last week, Saipem shocked investors by reducing 2012 guidance
and indicated a gloomy outlook for this year after it had been
repeating for months that it was optimistic over earnings.
"We didn't go totally out of control [in the 2009-10 contracts]
but the timing of the high-margin ones didn't show as we had
expected," said Hugh O'Donnell, Saipem's deputy CEO. "We let our
guard down."
Mr. Vergine said Saipem hasn't set aside any provision in
relation to a probe by Italian magistrates into possible corruption
of some contracts in Algeria.
The company is "very confident" there will be no new surprises
that could affect the group, said Mr. Vergine.
Write to Liam Moloney at liam.moloney@dowjones.com