News Column

Lamprell Warns On Lower Revenue In Second Half After Strong Interim

August 28, 2014

Anthony Tshibangu

LONDON (Alliance News) - Engineering and contracting services business Lamprell PLC Thursday reported an increase in profit for the first half, but warned that the business will experience lower revenue levels in the second half, although the full year is expected to ahead of expectations.

The company posted pretax profit of USD46.5 million for the six months ended June 30, up from USD12.3 million a year earlier, as revenue rose to USD632.3 million from USD506.6 million.

Lamprell said its performance was driven mainly by the new-build segment with a contribution from rig refurbishment, partially offset by weaker revenues in the onshore and offshore construction market.

"Although we were building a similar number of jack-up rigs in both the first half 2014 and the first half 2013, due to the phasing of construction and the low percentage of completion on four rigs in the first half 2013, the six months to June 30, 2014 delivered materially higher revenues than the same period the previous year," Lamprell said.

Gross margin increased to 13.6% from 9.1% a year earlier. Lamprell said lower onshore offshore construction revenues had a negative mix impact on margins but this more more than offset by a strong improvement in margins in the new build jackup rig business.

Looking ahead, the company said with the delivery of five major projects already this year and a number of new projects at a very early stage of construction, the business will experience lower revenues levels in the second half.

"This is being driven by the timing of build cycles for the major projects, in particular where cycles for the new build jackup rigs coincide, and the lower revenues from the onshore and offshore construction market," Lamprell said.

Nevertheless, the company expects that the outturn for the full-year will be ahead of expectations, with a heavy weighting towards the first half of the year.

The company said it will not pay an interim dividend but recognises its important. Therefore the group said it will seek to review and restore payment of a dividend at the "most appropriate time". Lamprell paid no dividend in its previous full financial year either.

The stock was trading down 0.8% at 155.00 pence Thursday morning.

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Source: Alliance News

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