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May 14 (Reuters) - Spanish oil and gas engineering company Tecnicas Reunidas now expects its 2018 profit margin will be at the lower end of its official guidance due to project delays and cancellations, its CEO said.
Tecnicas Reunidas reported on Monday that its margin on earnings before interest and tax (EBIT) was just 0.4 percent in the first quarter, compared with guidance of 1.5-2.5 percent for the full year.
The news sent shares in the company down nearly 4 percent.
If no new projects are awarded, EBIT margin for the year would be at the lower end of the outlook range, though reaching a 4 percent target for 2019 was “doable” as the company worked through the backlog, Chief Executive Juan Llado said in a conference call.
The company’s first-quarter backlog fell to 9.7 billion euros ($11.6 billion) after two consecutive quarters of growth.
Tecnicas Reunidas saw less activity in 2017 with a gap between project completions and new project awards.
The company issued a profit warning in November as it witnessed a sharp contraction of margins with an increase in idle costs and some cost overruns. ($1 = 0.8344 euros) (Reporting by Nadiia Karpina in Gdynia Editing by David Goodman and Susan Fenton)