Oilfield services group Petrofac enjoyed a good start to the year with new orders swelling its backlog to record levels and results remaining in line with previous guidance for the full year.
The company said its Engineering, Construction, Operations & Maintenance (ECOM) division has suffered no significant impact from the recent military clashes in the north of Iraq, with its main operation south and east of Baghdad and representing less than 5% of the group's expected revenues for 2014.
It maintained full year net profit guidance in the range between $580m and $600m, significantly weighted toward the second half. Analysts at Investec predicted the skew was likely to be split 25/75, compared with 37/63 last year and therefore more than the market expected but "not unusual".
Chief Executive Ayman Asfari said the core ECOM division as a whole delivered a "good operational performance" while the Integrated Energy Services (IES) division remained "focused on delivering improved operational performance on certain projects in the portfolio" after its performance led to a profit warning in May.
On IES he added: "Looking further ahead, whilst we continue to see strong demand for the provision of integrated services, we are prioritising those opportunities which make the best use of our existing core areas of strength, offer clear synergies with ECOM, and deliver attractive returns on capital employed."
Within ECOM, the onshore engineering unit was particularly strong and is expected to substantially ramp up activity levels, revenue and net income in the second half of the year as a number of major projects move into the execution phase.
New orders of $6.8bn from this unit were the driving force behind group backlog increasing from $15bn at the end of calendar 2013 to $20.1bn.
The smaller offshore segment was solid, and won its largest ever largest offshore engineering, procurement, construction and installation project for a North Sea wind project in consortium with Siemens, while the consulting unit won its largest ever award for an engineering, procurement and construction management contract in Oman.
Net debt was up from $0.7bn to $1.3bn, reflecting ongoing investment in IES and an offshore installation vessel, dividend payment and the continued high level of working capital balances on certain contracts.
Investec said, based on its "conservative assumptions" it sees further valuation upside as the E&C business motors ahead.
Analysts left full year forecasts unchanged, although it added the bigger-than-expected second half skew was "a risk".
Shares in Petrofac initially spiked higher, before tumbling 2.1% to 1218p by 12:45 on Tuesday.