Shares in Lamprell (LAM) rose 15 per cent on news that the rig maker more than doubled adjusted net profits to $93.2m (£63m) in 2014. Although revenues were broadly static on the previous year, improved efficiency and project execution resulted in a $50m reduction in selling costs.
Activity was solid in the new-build business, while rig refurbishment activity gained momentum through the second half of the year. The company completed a record number of big-ticket projects, and - crucially - wasn't forced to utilise contingency funds due to improved operational performance. This had a positive impact on gross margins, offsetting weakness in the onshore and offshore construction business. Here, revenues are coming under pressure as capital budgets in the oil and gas industry are reined in.
At the year-end, Lamprell's order book stood at $1.2bn, a one-third increase year on year. With a bid pipeline standing at $5.2bn, and 83 per cent revenue visibility for 2015, prospects seem pretty bright. But management's ability to convert the bid pipeline into firm orders will invariably be affected if oil prices remain in the doldrums.
JPMorgan Cazenove expects adjusted EPS of 17¢ for this year, from 30¢ in 2014.
| LAMPRELL (LAM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 113p | MARKET VALUE: | £387m | |
| TOUCH: | 112-114p | 12M HIGH / LOW: | 178p | 94p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 4 | |
| NET ASSET VALUE: | 197¢* | NET CASH: | $260m | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2010 | 0.50 | 65.0 | 30.0 | 12.3 |
| 2011 | 1.20 | 64.0 | 27.0 | 8.0 |
| 2012 | 1.00 | -115 | -43.0 | nil |
| 2013 | 1.07 | 37.8 | 12.7 | nil |
| 2014 | 1.08 | 93.7 | 37.4 | nil |
| % change | +1 | +148 | +195 | - |
Ex-div: na Payment: na £1=$1.48 *Includes intangible assets of $205m, or 60¢ a share. | ||||
