Italian oil and gas industry contractor Saipem plans to cut 8,800 workers by 2017; the decision part of a restructuring plan that follows more than €900m ($993m) in writedowns.
The company, which is 43% owned by energy giant ENI, says it has been hit hard by the global collapse in oil prices and therefore revised down its 2015 outlook but said it expected its restructuring plan to save €1.3bn ($1.4bn) over two years. Saipem said in a statement it expected to post a net loss this year of around €800m ($882m) and an operating loss (EBIT) of around €450m ($496m).
Eni brought in Stefano Cao as chief executive at Saipem earlier this year to turn around the company which has had around €12bn ($13.2bn) wiped from its balance sheet in the last 30 months after a corruption probe in Algeria, two profit warnings and a glum business outlook. Low oil and gas prices have prompted major oil companies and governments to cut energy investments and shelve projects, starving oil service companies of business.
Saipem, which employs around 50,000 people, said it would cut 8,800 jobs around the world in 2015-2017 as part of a turnaround plan that sees savings over two years of €1.3bn ($1.4bn). “I don’t know whether this is sufficient or not, time will tell,” Cao told analysts.
Saipem’s turnaround plan will include the downsizing of some of its construction yards, such as the one in Brazil, and scrapping five vessels that are no longer commercially viable in current market conditions, as international crude prices hover below $60 a barrel.