Saipem SPA Earnings - Q1 2026 Analysis & Highlights
Saipem SpA reported strong Q1 2026 operational performance with EBITDA growth and improved margins, while navigating Middle East geopolitical challenges and confirming full-year guidance despite potential supply chain disruptions from Strait of Hormuz closure.
Key Financial Results
Revenue of €3.5 billion in Q1 2026, unchanged year-over-year, with €1.1 billion generated in the Middle East region.
EBITDA of €434 million, representing 24% year-over-year growth, with EBITDA margin expanding to 12.3% from 10% in Q1 2025 and 11.4% in Q4 2025.
Net result of €78 million and operating cash flow of €392 million, broadly in line with the prior year.
Net cash position of €1.2 billion on a pre-lease basis, improved by €218 million in Q1 2026 through strong cash generation of €899 million.
Order intake of €1.7 billion in Q1 2026, corresponding to a book-to-bill ratio of 0.5 times.
Commercial pipeline of €58 billion, increased from €54 billion at Q4 2025 results.
Business Segment Results
Asset Based Services revenue of €2 billion, representing a 2% year-over-year increase, driven by strong progress on Mediterranean projects including COMP3 in Qatar, Bouri in Libya, and Neptun in Romania.
Asset Based Services EBITDA of €333 million, a 33% year-over-year increase with margin expansion of 3.7 percentage points versus Q1 2025 and 80 basis points quarter-over-quarter, primarily due to better utilization of owned construction fleet.
Asset Based Services EBIT margin expanded 50 basis points year-over-year from 5.8% to 6.3%, with EBITDA growth more than compensating for increased lease-related depreciation.
Drilling Offshore segment experienced year-over-year revenue and EBITDA decline, mainly reflecting fleet reduction following exit of Pioneer and Perro Negro 12 jack-ups in 2025, lower activity by Perro Negro 7 and Perro Negro 8, and marginally lower day rates for certain rigs.
Energy Carriers revenue remained broadly stable in Q1, with increased contribution from Mozambique LNG and Italian biorefineries offset by lower contribution from Saudi Arabian and Nigerian projects.
Energy Carriers EBITDA margin almost doubled compared to Q1 2025 and grew 20 basis points quarter-over-quarter, reflecting improved project mix.
Middle East backlog of €11.5 billion at end of Q1, mainly in the offshore segment, with dedicated fleet largely positioned in the region requiring no additional vessel transit through Strait of Hormuz.
Capital Allocation
Depreciation and Amortization increased by more than 40% in Q1 2026 compared to Q1 2025, with lease-related D&A nearly doubling from approximately €90 million to €170 million due to growth of chartered fleet.
Expected D&A of approximately €1.1 billion for full year 2026, with Q1 2026 levels serving as a good proxy for following quarters.
Lease liabilities declined by €31 million in Q1 2026 and expected to continue declining as chartered support vessels are released back to owners upon project completion.
Lease repayments of €138 million in Q1 2026, broadly stable compared to Q4 2025, with expected lease repayments of €650-700 million for full year 2026.
Lease liabilities expected to decline to approximately €900 million at end of 2026 from approximately €1.3 billion at end of 2025.
Gross debt repayment of €271 million planned for 2026, including €30 million in ECA facilities repaid in Q1 and €241 million in EMTN bonds planned for repayment in July.
Capital expenditures of €40 million in Q1 2026 against full-year guidance of approximately €450 million, with expected ramp-up from Q2 onwards, particularly in Drilling Offshore for cyclical vessel maintenance.
Liquidity position of €3.6 billion, comprising €1.4 billion available cash, €1.6 billion cash in joint ventures, and €600 million undrawn revolving credit facility.
Industry Trends and Dynamics
Strong demand for offshore E&C services across both conventional and deepwater segments, with solid opportunities in FPSOs, upstream, fertilizer, biorefinery, and operating and maintenance segments.
Geographic concentration of pipeline largely in Middle East and Africa, with attractive growth potential in Far East.
High commodity prices driving increased demand for deepwater activity, with historical pattern showing increased deepwater demand when oil prices exceed $70 per barrel.
Increased demand for infrastructure linked to supply diversification, similar to patterns observed following the 2022 Ukraine conflict.
Fertilizer demand expected to increase due to current elevated urea prices.
Potential for infrastructure repair and reconstruction in Middle East following conflict-related damage, with opportunities for both offshore and onshore facilities.
Competitive Landscape
Saipem's competitive advantages in Middle East repair work include prior construction of many damaged facilities, providing knowledge and understanding of plants, combined with existing mobilization in the region.
Competition expected in Middle East repair activities from domestic players and potentially Indian or Chinese competitors, though Saipem's historical involvement provides differentiation.
Deepwater EPCI capabilities demonstrated through recent Longtail project award in Guyana, representing the eighth consecutive project in that region.
State-of-the-art drilling fleet capabilities, particularly the Santorini and other seventh-generation units equipped to operate in demanding sea conditions such as West Africa.
Macroeconomic Environment
Geopolitical conflict in Middle East and Strait of Hormuz closure creating potential supply chain disruptions, with critical component deliveries at risk if closure extends beyond May-July 2026.
Potential inflation impact from prolonged Strait of Hormuz closure, though most 2026 Gulf activity supported by materials already present in region purchased in previous years.
Insurance costs expected to increase but remain manageable within project contingencies.
Logistics disruptions and port congestion anticipated in Gulf region due to accumulated late deliveries and goods requiring clearance.
High oil prices reinforcing positive outlook for energy investment globally and supporting demand for infrastructure projects.
Growth Opportunities and Strategies
Recent EPC awards totaling $900 million from Saudi Aramco for three CRPOs aimed at maintaining production levels of Safaniya offshore oil field, with fabrication at Saipem's Dammam yard minimizing Strait of Hormuz transit risk.
Biorefinery portfolio expansion with €1 billion in EPC awards since 2023, including new Priolo Biorefinery project in Sicily with 500,000 tonnes per year capacity for SAF biojet fuel and HVO diesel production.
Drilling vessel contract extensions and new awards including three contracts for Saipem 12000 (Angola, Namibia, Mozambique), Santorini contract with Eni in Ivory Coast, Scarabeo 8 extension through March 2029 in Norway, and Perro Negro 4 extension through end of 2027 in Egypt.
Courseulles offshore wind project progressing with 24 sockets drilled and 15 monopiles installed as of Q1, with completion expected in Q1 2027.
Operating and maintenance segment expansion with expected order intake acceleration in Q2 and positive announcements anticipated.
Deepwater strategic focus with emphasis on consolidating deepwater drilling capabilities and leveraging state-of-the-art equipment for demanding operational environments.
Tender participation across multiple segments including offshore, onshore, and drilling activities, with active commercial engagement in West Africa, East Africa, and Far East regions.
Financial Guidance and Outlook
2026 guidance confirmed based on Q1 performance, steady project execution progress in Middle East, supportive client attitudes, and expectation that Strait of Hormuz traffic will normalize in coming weeks.
Asset Based Services expected to deliver low-single digit revenue growth and double-digit EBITDA and EBIT growth for 2026, with improved margins year-over-year, assuming no major Middle East or Strait of Hormuz disruptions.
Drilling Offshore anticipated to experience double-digit decline in both revenue and EBITDA compared to 2025, with EBITDA margin declining year-over-year due to maintenance activity concentration, floater white spaces, and lower day rates.
Energy Carriers expected to see slight revenue decline while EBITDA margin improves in 2026 compared to 2025, with Mozambique LNG restart contributing positively while project completions in various regions partially offset gains.
Financial expenses expected to be slightly lower than 2025, reflecting decline in net financing costs ex-IFRS 16.
Effective tax rate expected to decrease to 33-38% range in 2026 from 40% reported in 2025.
Order intake expected to accelerate in coming quarters with peak expected in last quarter of year, following historical pattern of final investment decisions by clients around mid-year.
Medium-term target to achieve investment grade credit rating, supported by ongoing conversations with rating agencies.
Asset Based Services margins expected to remain in high double-digit range in medium term, with potential for further improvement but unlikely to exceed high double-digit levels.
Operational Resilience and Risk Management
Middle East operations running with limited disruption in Q1 2026, with only minimal and temporary disruptions recorded despite regional conflict.
Client payment performance strong with no payment issues recorded, reflected in positive cash flow figures.
Commercial activity proceeding normally with project awards not delayed due to geopolitical situation, though some meetings postponed in March due to travel difficulties now resolved.
Contract protections against inflation and price escalation included in many recently signed projects, providing mitigation against cost increases.
Project profitability reviews conducted monthly for critical projects and quarterly for all projects, with line-by-line assessment of project balance sheets and assumptions.
Provision reversals of approximately €130 million in Q1 2026 used primarily for Courseulles project execution without new provisions accounted for.
Working capital management strong with Q1 showing significant relief, though negative working capital contribution expected from Q2 onwards.
