Lamprell cautions on revenue for next year

The London-listed rig maker from Sharjah expects next year's revenue to decline, but its stock rose when it said it would cut costs.

A new rig at Lamprell’s shipyard in Hamriyah, Sharjah. Lamprell runs three rig building yards in the UAE. Jaime Puebla / The National

Lamprell, the London-listed rig-maker that has its operational head office in Sharjah, yesterday said it expected revenue to slide for the full-year next year.

Lamprell, which runs three rig building yards in the UAE, said revenue rose 28.4 per cent to US$451.3 million for the six months ended June 30. However it reported a loss of $4.4m for the period.

Its bottom line had been hurt by the deduction of $25 million from the final payment made by Ensco due to the late delivery of an oil rig.

The company now expects its 2017 financial year’s revenue to be in the region of $400m and $500m “depending on the outcome of a number of submitted bids awaiting award”.

Lamprell’s shares climbed 8.4 per cent in London yesterday afternoon after the company said it planned to cut costs to reflect the weak operating environment.

John Kennedy, Lamprell’s non-executive chairman, said in a statement accompanying the half-yearly results that “Lamprell’s substantial order intake two years ago meant that the business saw high activity levels and a solid underlying financial performance during the first six months, although the results were impacted by the delay in delivery of the Ensco 140 rig.” He added that the industry downturn has continued to affect the sector and Lamprell’s ability to win new contract awards during the first half of the year.

Last week Goldman Sachs said oil prices are likely to stay between $45 and $50 a barrel for a year.

The International Energy Agency (IEA) has said that current oil prices are too low to spur new investment.

The industry will cut spending for a third straight year in 2017, with $300 billion already slashed from investment and operational budgets in the past two years, the IEA said.

“Lamprell is in a solid position, both financially and operationally, as a result of our countercyclical investment which created a robust base for the group to not only ride out the storm, but also to enable long-term growth,” said James Moffat, the outgoing chief executive of Lamprell.

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