LNG firm Chiyoda sees profit hit by skills shortage

Friday, 09 November 2007

The Yokohama-based company, with large LNG contract executions and wins in recent years in countries such as Qatar and Nigeria, said that on a consolidated basis, new contracts for the six months ended September 30 amounted to 180 billion yen ($1.6Bln) a more than 50 percent decrease compared with the same period a year ago.

“Net income per share was 55.35 yen due to a decline in productivity caused by a tight supply of skilled workers which negatively impacted the gross profit margin,” Chiyoda said in its earnings statement.

The Japanese company is the latest in the energy EPC business to complain about the shortage of skilled peronnel such as engineers at a time of high demand from new and more challenging projects.

Chiyoda, along with France’s Technip, is responsible for the EPC work on the world’s largest LNG Trains to produce 7.8 million tonnes each per annum for the RasGas III project.

Technip reports its third-quarter results on November 15 and an area of focus is likely to be the evolution of profits at the French company's onshore division, which in addition to RasGas III is involved in two other major LNG projects alongside Chiyoda.

The Japanese company forecast operating income for fiscal 2008 would be around 22Bln yen ($196M), a fall of almost 27 percent.

Chiyoda said its backlog of contracts in the energy industry amounted to 918Bln yen ($8Bln). Revenues increased 48 percent to 312Bln yen ($2.7Bln).