Saipem down, but brokers say suspension of new Pa Brazil contracts will not affect Saipem
The company at the weekend the final outcome of an administrative case in Brazil and the confirmation of the acquittal by the Court of Appeal of Algiers in the criminal case for a 2008 tender
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(Il Sole 24 Ore Radiocor) - Shares Saipem are travelling at the bottom of the FTSE MIB, with declines of more than three points, after the oil&gas services group announced over the weekend the final outcome of an administrative proceeding in Brazil and the confirmation of the acquittal by the Algiers Court of Appeal in the criminal case over a 2008 tender. On Friday, prices had recovered after four consecutive declines. Instead, the Stoxx600 oil & gas sub-index rose. The Controladoria-Geral da Uniao, Brazil's federal body responsible for the defence of public assets, transparency and the prevention of corruption, concluded an administrative proceeding against Saipem relating to a 2011 contract for the installation of a gas pipeline: a non-enforceable ban on obtaining new contracts with the public administration had been established in December 2022, a decision that has been reformed into a two-year temporary suspension.
"The sanction has no impact on projects already started by Saipem in Brazil, as it relates exclusively to potential new contracts, and concerns only relations with the public administration," the company explained, stressing that the new decision was made possible by the recognition of the effectiveness of the compliance model adopted by Saipem group companies. The measure will nevertheless be appealed. According to several investment houses, the decision by the Brazilian Cgu has no effect on existing contracts in Brazil (current order book is around EUR 2 billion in value) and also has no impact on the forecasts of the current industrial plan, given that it did not contemplate orders in Brazil.
With regard to Algeria, Saipem announced that the Supreme Court has definitively confirmed the acquittal pronounced by the Court of Appeal of Algiers on April 16, 2023 on the 2008 tender relating to competitive feed studies for the Rhourde Nouss QH project. The confirmation of the acquittal is positive for Intermonte, which recalls that the most important case still open in Algeria for Saipem is related to the GNL3 Arzew project, for which the company has already set aside the entire petitum of about 200 million. For Equita, the two news on the proceedings in Brazil and Algeria have no impact on stock performance.
