The difficult conditions facing oil service companies are reflected in Lamprell's (LAM) half-year operating profit, which halved from the corresponding period in 2014 to $26.9m (£17.6m). Admittedly, revenue will be heavily weighted towards the second half of the year due to the phasing of construction cycles. Even so, the group warned that sales were unlikely to grow this year or next.
Following a strong start to the year, Lamprell's rig refurbishment business has seen a slowdown in recent months as drillers have postponed work until market conditions pick up. Yet the group still has seven new jack-up rigs under construction, and its order book now extends into the second quarter of 2017. Lamprell managed to win a contract from Abu Dhabi's National Drilling Company (NDC) for one of only three jack-up rigs ordered worldwide in the first six months of the year. It also secured further awards for modules from FTSE 250 oil services heavyweight Petrofac (PFC).
The good news for the UAE-headquartered rig-builder is that prospects for future remits are much brighter in the Middle East than elsewhere. Lamprell has an established regional presence and a competitive advantage due to its close proximity to projects.
Broker Numis Securities anticipates EPS of 17¢ for the full year, against 37.4¢ in 2014.
| LAMPRELL (LAM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 132p | MARKET VALUE: | £450m | |
| TOUCH: | 131-132p | 12-MONTH HIGH: | 178p | LOW: 94p |
| DIVIDEND YIELD: | nil | PE RATIO: | 12 | |
| NET ASSET VALUE: | 203¢* | NET CASH: | $303m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2014 | 632 | 46.5 | 26.9 | nil |
| 2015 | 351 | 20.4 | 5.9 | nil |
| % change | -44 | -56 | -78 | - |
*Includes intangible assets of $205m, or 60¢ a share £1=$1.53 | ||||
