LONDON (Alliance News) - Energy services company Lamprell PLC saw its shares surge on Thursday morning after the company reported higher pretax profit for 2014 as cost reductions complemented increased revenue.
Lamprell said its pretax profit for the year was USD93.7 million, compared with USD37.8 million in 2013, as revenue rose to USD1.08 billion from USD1.07 billion and its cost of sales fell to USD902.8 million from USD952.8 million.
Revenue was primarily driven by its new build segment, particularly from rig refurbishment work, but was partially offset by lower revenue from the offshore and onshore construction market. The margin improvement was down to its new build jack-up right business, which offset margin deterioration in its offshore and onshore construction business due to a weaker revenue mix.
Lamprell's year-end backlog was USD1.2 billion, compared with USD0.9 billion a year earlier, with its bid pipeline at USD5.2 billion against USD4.7 billion.
The company said its focus in 2015 is on conversion of its bid pipeline, with awards for some projects having been delayed as the lower oil price hits capital expenditure plans for oil and gas companies. It said its revenue visibility for the year is around 80%, affirming its earlier guidance.
Lamprell said it will not pay a dividend for the year.
"2014 was a year of outstanding performance. Record financial results were driven by strong project execution and cost savings, and some exceptional factors such as the favourable phasing of the construction cycles. The successful completion of the rights issue and refinancing during the year provide the group with a strong basis to deliver on our strategy," said Chairman John Kennedy.
"Lamprell started the New Year in a position of relative strength, with good revenue coverage for 2015, a solid bidding pipeline and a firm financial platform. The board is mindful of the challenges facing the industry in a lower oil price environment and affirms the revised guidance given in January," Kennedy added.
Lamprell shares were up 15% to 117.00 pence in early trade, one of the best performers in the FTSE All-Share index.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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