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Trade sinks further at Gulf Marine

Two of the marine services group's vessel lease contracts have been terminated early.
July 6, 2016

Just over three months on from a stinging profit warning, trading at Gulf Marine Services (GMS) appears to have deteriorated further.

IC TIP: Buy at 40p

Worryingly, the cost efficiencies which clients now demand in the lower oil price environment have translated into the cancellation of two vessel leases, bringing the secure order backlog down to $258m (£196m). The effect of this is likely to pare back cash profit for the 2016 financial year to around $100m-$110m, while year-end net debt is expected to hit $435m.

Prior to this update, Canaccord Genuity was forecasting pre-tax income of $54.8m and EPS of 15¢ this calendar year, down from $77.1m and 24¢ in 2015.