LONDON (Alliance News) - Lamprell PLC Thursday said its first-half results were in line with expectations despite profit more than halving, and the company warned that revenue is not expected to grow in 2015 or 2016.
Due to the current difficult market conditions, Lamprell said it will not pay an interim dividend and ruled out a dividend for the full year altogether.
Shares were down 0.6% to 128.50 pence per share on Thursday morning.
The oil and gas engineering company said its pretax profit more than halved to USD20.4 million in the six months ended June 30, from USD46.5 million a year earlier, as revenue did the same, dropping to USD351.4 million from USD632.3 million.
The company said revenue was mainly derived from building new jackup rigs, refurbishing older rigs and construction projects for both onshore and offshore projects. The dramatic fall in revenue was partially offset by administrative expenses also more than halving, to USD15.5 million from USD32.3 million.
Earnings before in interest, tax, depreciation and amortisation dropped to USD33.8 million from USD66.2 million.
The company's backlog has remained flat at USD1.20 billion at the end of June, and Lamprell now has a high level of coverage, with over 90% of revenue covered for 2015 and over 60% covered for 2016, it said.
Lamprell reported net cash of USD316.3 million as of the end of June, which is higher than the USD280.6 million at the end of June 2014. Net cash is expected to trend slightly downwards by the end of the year but "remain strong", it said.
"These challenging market conditions are now expected to last longer than originally envisaged by the industry. With a strong balance sheet and cash position and a market-leading operational performance, the group is well positioned to weather this difficult climate," said Chairman John Kennedy.
"In addition, the board is undertaking a thorough review of our strategy to ensure it is robust in the face of industry challenges," he added.
The company spent significantly more in capital expenditure in the first half, totalling USD44.9 million compared to only USD9.7 million a year earlier. Of the total, USD29.1 million was invested in areas which have led to cost savings and will provide further savings in the future, it said.
Going forward, Lamprell is expecting revenue for the full year to be broadly flat from the previous financial year, but said its performance will be heavily weighted toward the second half of 2015.
However, the company said it is also expecting revenue in 2016 to remain flat.
"The company maintains its revenue guidance for 2015. As previously indicated, the group's results for 2015 will be heavily weighted towards the second half of the year reflecting the phasing of construction cycles, with a number of new major projects ramping up during the second half of 2015 and into 2016," said Chief Executive James Moffat.
"In addition, the group continues its programme of overhead costs reduction in its drive to realise savings across the business," he added.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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