General presentation of the Saipem Company:
The Saipem Group is an Italian industrial group whose specialty lies in engineering and construction services for the oil and gas industry. Of course the amount achieved through each type of activity regarding the proportion of this company’s turnover varies.
Saipem achieves the vast majority of its profits through engineering services as well as those of construction and installation in the petroleum and gas industry with mainly the offshore services such as underwater piping and oil platforms, only 34% is achieved through onshore services including piping in hostile environments, hydrocarbon production units, drilling rigs and refineries.
The drilling services of Saipem, onshore and offshore, represent nearly 14.8% of this company’s turnover.
Of course, Saipem achieves the vast majority of its turnover internationally.
Know the competition to Saipem shares:
Saipem is a subsidiary of the Italian ENI group and is specialised in the search, development and drilling for crude oil. It is one of the major players in the European oil sector. However, Saipem is also faced with major competition in Europe from various sized other companies. Here are the major current competitors of the Saipem Company:
- SONATRACH: An Algerian company specialising in the research, operation and pipeline transfer, as well as the processing and sale of hydrocarbons and derivatives.
- TechnipFMC: World leader in subsea, onshore/offshore and surface projects.
- TOTAL: This is a global energy group, one of the top international petroleum and gas companies and it holds second position worldwide for solar power just behind SunPower.
- PERENCO: An oil company that operates in Gabon, the Cameroons, Congo, RDC, Colombia, Guatemala, Ecuador, Tunisia, Egypt, Turkey, Venezuela and the United Kingdom.
- FLOWSERVE: Worldwide supplier of API 610 pumps with a significant range of pressure, output and temperature.
Strategic alliances implemented by the Saipem Group:
Here are details of recent partnerships implemented by the Saipem Group.
- Sofregaz: In 2004, through a joint company, Sofregaz and Saipem gained the market of a GNL gas reception terminal at Fos Cavaou, near Marseille.
- Chiyoda Corporation : In 2014, Xodus announced that the Italian group Saipem and the Japanese Chiyoda Corporation became allies with the energy consultancy Xodus Group to launch a new submarine engineering company dedicated to the oil and gas sector.
- Enel: Finally, in 2017, the Italian groups of Enel Collective Services and Saipem petroleum services prepared to sign an agreement for the construction of thermal power plants worldwide according to two close sources.
To be able to better understand the historical charts of the Saipem share price it is essential to collect and combine data issuing from a technical analysis with that of a fundamental analysis. Therefore, to assist you we have gathered here the major historical economic and financial events of this company over the past few decades.
- It was in the 1950s that the Saipem Company started its activities with the implementation of onshore piping and the construction of gas and crude oil processing and drilling installations for ENI which is the owner of this company.
- Since 1969 Saipem has been developing internationally with offshore developments in the Mediterranean and North Sea.
- In 1984, the Saipem share price was quoted for the first time on the Milan stock exchange. Since this time, ENI has been the only shareholder of this group to reduce its shares to only 43% of its original quantity.
- In 2002, Saipem strengthened its engineering and project management structure through the purchase of several competitors including Bouygues Offshore. It thereby became present on the major EPIC sector projects.
- In 2006 the Saipem Group proceeded with a buyout of Snamprogretti, a subsidiary of the ENI Group, which is specialised in large onshore EPC projects notably related to the development of natural gas resources. This company was integrated with Saipem in 2008.
- In 2015, the Saipem Group announced its intention to suppress over 8,800 jobs over a period of three years. During the same year the group also announced the opening of a capital of over 3.5 billion dollars for the beginning of the year 2016. This opening was subscribed to by ENI which remains the group’s principal shareholder with 43% of the shares. Still in 2016, ENI announced the sale of 12.5% of its share in the Saipem Group to Fondo Strategico Italiano, an Italian investment fund.
Factors in favour of a rise in the Saipem share price:
To be able to understand what could create interest and enthusiasm from investors for Saipem shares and to better evaluate the true worth of this asset it is of course absolutely necessary to know the company’s advantages and disadvantages. This is why we now offer you the opportunity to learn more in detail about the current strong points of this group as well as its major disadvantages. This will also enable you to better understand the challenges it faces from its competition and the future factors that could influence movements in its share price on the stock markets.
Let us commence this comparative analysis of the advantages and disadvantages of the Saipem share price with a recapitulative of the principal advantages currently enjoyed by the Saipem Group which could make it attractive to investors:
- Firstly, the Saipem Group as you may already know possesses a significantly high cash flow. This information is important as it enables the company to achieve different strategic investments such as that of research and development in order to implement more competitive and technologically advanced solutions and systems than those of its competitors.
- Among the major advantages of the Saipem Company we can also mention the fact that this group operates on an international level. Its geographical expansion strategy has enabled it to position itself in various countries around the world and it currently operates in over 90 countries. The group employs no less than 75,000 people worldwide at present.
- Still relating to the major strong points of this company we should not forget the significantly large diversification of Saipem’s activities. In fact this group operates a wide range of varied companies that are located here and there throughout the world. This helps to ensure a presence throughout the energy chain notably through a number of subsidiaries it currently owns as well as those it will undoubtedly acquire over time.
- Another factor that it is important to examine when completing an analysis of this company is its strengths relating to its retail sales operations. These in fact appear to be particularly solid and reliable and are achieved mainly in Europe.
- And finally, to better understand how the Saipem Company can be so advantageous for trading or attractive to investors we should examine the principal values of this company as represented by its logo, the company symbol, which is a six pawed dog. The dog’s paws represent the principal values of the company’s basic development strategy as follows: durability, culture, partnership, innovation, and efficacy. These fundamental values continue to improve the brand’s image.
Arguments in favour of a drop in the Saipem share price:
As we have just examined, the Saipem Group has a number of advantages that could promote this company’s popularity in the trading world. But it is important not to simply dwell on its advantages, the Saipem Company also has a number of weak points that we shall examine now that could weigh upon its future growth and its share price movements on the stock markets.
- Despite operating subsidiaries here and there throughout the world the Saipem Company is still fairly limited to the European market. It is therefore important for the group to implement a real expansion strategy outside the European zone to increase its presence in certain countries, particularly those in emerging markets.
- Another weak point of the Saipem Company that equally applies to other companies in this sector relates to legislation and regulations that are increasingly strict concerning the petroleum industry in general. In fact, partly due to climate change it is becoming increasingly complicated for companies in this sector to obtain the authorisations necessary to undertake certain operations and when they do the latter are closely monitored by the governments.
- The competition is also particularly strong and aggressive in this activity sector and the Saipem Company regularly needs to face pressure from other major companies that regularly try to size its share of the market. It therefore needs to significantly increase in terms of competitiveness and innovation to retain its position among the leaders in this sector.
- And finally, the last disadvantage of this asset and a weak point of this company relates unsurprisingly to its strong dependence on the petroleum industry. The oil prices have recently experienced a strong falling trend which appears to have settled in for the long term. Also, and partly because of this falling trend in the price of black gold, some of the major petroleum companies have started to move away from fossil fuels towards renewable energy which could of course influence the future contracts of Saipem over the long term if this company does not succeed in increasing the diversity of its activities by following this trend.
As we have explained, the weak points of the Saipem Company are also numerous and this is why you need to study them carefully and take them into account for your analyses of this asset. Also, the information provided here is only an indication of this company’s affairs, for informational purposes only, and should not be used alone without completing a comprehensive and up to date fundamental analysis of this asset and in particular taking into account the exterior data such as forthcoming publications and announcements and all fundamental events and news that could affect or accentuate the strengths or weaknesses of this company.