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Interim Results

Petrofac cuts divi amid weak commodity prices

30 August 2017 07:41

Petrofac has cut its interim dividend by 42% to 12.7 cents per share after a decline in commodity prices reduced its cash flow.

The company said it intends to target a dividend cover of between 2.0x and 3.0x business performance earnings as it transitions back towards a low capital intensity business model.

Business performance net profit fell by 4% to $158 million in the first half.

Revenue in the engineering and construction business fell by 20% due to project scheduling and in the integrated energy services division by 37%, or 14% excluding asset sales.

Engineering and production services revenue declined 17% reflecting lower activity, utilisation and order intake, as well as the depreciation of sterling. But net profits grew 2% to $51 million.

Group net debt was $1.0 billion at 30 June 2017, up from $0.6 billion six months ago.

The group has secured $2.7 billion of new orders in the year to date.

It said profit for the full year is expected to be weighted to the second half of the year.

"We are taking a range of measures to deliver a sustainable reduction in net debt and strengthen our balance sheet. These include a relentless focus on operational excellence, reducing capital investment, rebasing our dividend and divesting non-core assets," the company said.

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