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Lamprell plc (LAM)

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Wednesday 16 May, 2012

Lamprell plc

Trading Update

RNS Number : 4193D
Lamprell plc
16 May 2012
 



 

16 May 2012

 

LAMPRELL PLC
("Lamprell" or "the Group")

 

TRADING UPDATE

 

Lamprell (ticker: LAM), a leading provider of diversified engineering and contracting services to the onshore and offshore oil & gas and renewable energy industries, issues the following trading update on the expected financial performance of the Group for the current year.

 

During the year to date the Group's financial performance has been adversely affected mainly by progressive delays in key specialised vendor equipment deliveries for new build jackup projects together with the progressive slippage in the timing of expected new project awards and delayed client deliverables.  The delayed equipment deliveries are representative of the current tightening in the worldwide supply chain for specialised jackup rig components which is expected to ease during 2013 when new capacity comes onstream.  This has caused a delay in revenue generation and led to the significant underutilisation of resources including personnel. Following the rescheduling of construction work it is anticipated that the final delivery dates of the projects affected by delayed equipment deliveries will remain on track.

 

In addition, we have recognised further costs linked to the final specialised equipment commissioning on, and the delivery of, the wind farm installation vessel projects Windcarrier Brave Tern and Seajacks Zaratan both of which are scheduled for delivery in the second quarter.

 

It is anticipated that the delay in revenue generation together with the additional costs will result in the Group incurring a small loss in the first half of the year with a recovery expected in the second half of the year.  Following a review of project schedules and considering the substantial order book cover we now expect full year revenue for 2012 to be broadly in line with last year at approximately US$1,100 million with a net profit margin of approximately 3.5%, considerably below the Board's original expectation for the year.  The Board believes that the Group's margin performance will recover in 2013.

 

In light of the reduction and timing of our projected revenue for 2012 we are reviewing our cost base and adjusting it accordingly.  This process will be supported by the continued development of the Group's systems and the on-going implementation of a Group wide Enterprise Resource Planning system with a view to providing more timely management information.

 

The Group's net debt at 14th May 2012 was US$ 173 million, representing an increase of US$ 71 million over the 31 December 2011 net debt of US$ 102 million.  However it is anticipated that, upon delivery of the Seajacks Zaratan and Hull 108, the majority of the syndicated loan facility entered into in connection with the acquisition of Maritime Industrial Services Co.Ltd.Inc. will be repaid. 

 

In the year to date we have announced contract awards totalling US$ 684 million, including a further two LeTourneau Super 116E jackup rigs for National Drilling Company, Abu Dhabi ("NDC"), and a LeTourneau Super 116E jackup rig for an international drilling contractor. NDC has an option, exercisable in the six month period ending November 2012, to require the Group to build a further two LeTourneau Super 116E jackup rigs for the same price. 

 

The Group maintains a substantial order book extending to Q1 2015 which at the end of April was US$ 1,579 million, comprising US$ 1,268 million from new build marine projects, US$ 232 million from offshore construction projects including offshore platforms, US$ 37 million from jackup rig refurbishment projects and US$ 42 million from the Group's other fabrication activities and subsidiary operating companies. The Group's bid pipeline at the end of April was US$4.8 billion.

 

We see continued strength in our operating markets, our bid activity remains at a historically high level and the Board remains optimistic that the long term prospects of the Group remain promising.

 

The Group was expecting to release an interim management statement on 17th May 2012; this trading update replaces the interim management statement.

 

Management will be hosting an analyst conference call at 8am (BST) on 16th May, M:Communications should be contacted for the dial in details.

 

- Ends -

 

 

Enquiries:

 

Lamprell

+44 (0) 207 920 2347

Nigel McCue                                       


Jon Cooper




M:Communications, London

Patrick d'Ancona

+44 (0) 207 920 2347

Andrew Benbow

+44 (0) 207 920 2344

 

Cautionary Statement

 

This announcement contains certain forward-looking statements with respect to the financial condition and operational results of Lamprell plc.  These statements and forecasts involve risk, uncertainty and assumptions because they relate to events and depend upon circumstances that will occur in the future.  There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements.  These forward-looking statements are made only as at the date of this announcement. Nothing in this announcement should be construed as a profit forecast.  Except as required by law, Lamprell plc has no obligation to update the forward-looking statements or to correct any inaccuracies therein.

 


This information is provided by RNS
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