Technip Advances in Paris After Reporting Fourth-Quarter Profit

By Tara Patel

Feb. 19 (Bloomberg) -- Technip SA, Europe’s second-largest oilfield-services provider, jumped the most in two weeks in Paris trading after reporting a quarterly profit. The company forecast lower sales this year on project delays and a drop in orders.

Technip rose as much as 2.22 euros, or 9.3 percent, to 25.98 euros, the biggest intraday gain since Feb. 4. The stock traded at 25.20 euros as of 10:29 a.m. local time, extending its advance this year to 16 percent.

Fourth-quarter net income climbed to 134 million euros ($169 million), compared with a net loss of 97.5 million euros a year earlier, the company said today in a statement. Full-year sales were 7.5 billion euros, exceeding Technip’s November forecast and a prediction for this year of 6.1 billion to 6.4 billion euros, at current exchange rates.

There’s a “good showing in every division,” Bertrand Hodee, an analyst at Kepler Capital Markets with a “buy” rating on the stock, said today in a note. “The group acknowledges current uncertainties and challenges but 2009 guidance is very reassuring and well above our expectations.”

Fourth-quarter sales fell to 1.9 billion euros from 2.1 billion euros, while the order intake shrank to 1.2 billion euros from 2.1 billion euros.

Qatar Costs, Delays

Technip cut its 2008 sales target three times, while raising profit margin forecasts. The Paris-based company is helping to build some of the world’s largest liquefied natural-gas projects in Qatar for Exxon Mobil Corp. and Royal Dutch Shell Group Plc and took a 200 million-euro charge at the beginning of last year because of costs and delays to the installations.

Technip reported a contract backlog of 7.2 billion euros at the end of 2008, down from Sept. 30’s 7.7 billion euros and 9.4 billion euros at the end of 2007.

“Some new projects or those that are at an early stage are being deferred,” the company said today. “Significant delays” have hampered U.S. refining and petrochemical ventures and unconventional oil production from projects such as the Canadian oil sands, it said.

Technip expects “stable to moderate growth” in subsea revenue this year and a subsea operating margin of 16 to 18 percent.

“The current inertia in the decision process is likely to continue until hydrocarbon demand and costs stabilize,” the company said. It’s “difficult” to predict how long this will last amid the economic slowdown, it added.

Saipem, Schlumberger

Saipem SpA, Europe’s largest oilfield-services contractor by market value, last week said fourth-quarter earnings rose 34 percent as record crude prices in the middle of last year spurred demand. Schlumberger Ltd., the world’s largest oil-services provider, said last month that fourth-quarter profit fell 17 percent as exploration spending decreased, while Baker Hughes Inc. said the outlook for 2009 has “continued to deteriorate.”

Technip has said it’s reviewing spending plans for this year and next because of the financial crisis and oil’s $100 plunge from July’s record, which may trigger a reassessment of new exploration and production projects. Last year it said it would focus more on offshore projects, which offer higher profit margins, and move away from building onshore installations in markets such as North America and Australia, where it has less control over construction expenses.

Chief Executive Officer Thierry Pilenko has pledged to choose contracts more carefully to control costs. Canadian oil sands and African LNG projects may be delayed because of the drop in oil prices, he said in December.

Technip may invest less than 400 million euros in capital expenditure this year, compared with 401 million euros in 2008, the company said in a slide presentation on its Web site, calling the program “on track.”

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net.