Oil services company Petrofac (PFC) fell 5.6% as it laid bare the impact of the Covid-19 pandemic on the business and announced further cost cuts to help it weather the storm.

The company lifted its cost cutting target while reiterating guidance for 'materially lower' profits in 2020 after the Covid-19 pandemic smashed crude markets.

Revenue for the year through December is expected to be around $4 billion, down from $5.53 billion reported for 2019.

It added that it was also on track to cut gross overheads and project support costs by at least $125 million in 2020.

Additional measures were being taken to increase the 2021 cost saving target to around $250 million.

Petrofac derives a big chunk of its business delivering engineering and construction services to clients in the Middle East, many of which will be struggling to balance their finances as they face depressed oil prices and demand as well as production limits aimed at preventing the market from collapsing any further.

'The Covid-19 pandemic and collapse in oil prices have had a material impact on our industry in 2020,' chief executive Ayman Asfari said.

'Notwithstanding these unprecedented challenges, we have continued to deliver for clients whilst doing everything within our control to protect the health and wellbeing of our people.'

'We have also taken decisive action to protect our balance sheet, liquidity and the long-term health of the business.'

Looking ahead, Afari said the near-term economic outlook remained unclear, while noting that clients were delaying awards and adopting tough commercial positions.

Illustrating how reduced demand for services and equipment from the industry has left services businesses in a weak bargaining position.

READ MORE ABOUT PETROFAC HERE

Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account. AJBell logo

Issue Date: 16 Dec 2020