Ezra/ Swiber

Ezra/ Swiber: Ezra is down 0.8%, whilst Swiber is down 1.4% today. Saipem, one of the world’s largest integrated oil and gas service providers, fell 34% yesterday after releasing their latest FY12-13 earnings guidance which were significantly lower than consensus by 50% (for FY13). Saipem guided for 50% decline in FY13 EBIT overall but more importantly (from an EZRA viewpoint) they also said that they expected a 70-80% decline in onshore and offshore engineering and construction EBIT due to completion of high-margin projects, execution of lower margin contracts in FY13, delay in contract awards and investment in Brazil. This new guidance simply highlights the ongoing margin pressure from the competitive environment. OSK DMG noted that Street seems to be far too optimistic despite both the rising costs and falling margins on the sector. House think high wages, geographical expansion and competitive bidding will put pressure on operating margins for offshore construction players like Ezra Holdings and Swiber Holdings.