Saipem Posts Record Order Intake

Saipem SPM posted solid fourth-quarter results as strengthening offshore activity around the world supported healthy demand for the firm’s drilling and engineering & construction, or E&C, services. Total 2022 revenue jumped 53% year over year (excluding the onshore drilling segment, divested in the second quarter of 2022), and the firmwide EBITDA margin was 7% compared with negative 17% in 2021. We’ll incorporate the firm’s full financial results shortly, but for now we maintain our fair value estimate of EUR 2. Our no-moat rating and stable moat trend are also unchanged following results.

Saipem’s improved performance is due in equal parts to the onshore and offshore E&C segments, together accounting for over 90% of Saipem’s business, though we expect its offshore businesses will lead the charge for further gains in 2023 and beyond. Saipem’s offshore drilling fleet is almost sold out for 2023 and is already contracted at 70% utilization for 2024. The offshore drilling segment, though a small portion of Saipem’s overall business, is consistently the most profitable segment by a long shot—its 2022 EBITDA margin was 31%, over 4 times the firmwide margin. We expect profitability will continue to expand as older contracts roll over to incorporate updated day rates, currently exceeding $400,000 per day.