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Pre-emption pays for Hunting

Hunting reacted swiftly to the fall-away in crude prices and the group's share price has been bolstered by its pre-emption.
June 10, 2015

One of the many good things about Hunting (HTG) - a long-time IC favourite - is that the group never attempts to gloss over bad news. The specialist oil equipment provider's first-quarter update highlighted some of the most unfavourable market conditions in living memory; a continued fall-away in the North American rig count has put a big dent in group operating profits, while forward price assumptions on West Texas Intermediate have improved only marginally.

IC TIP: Hold at 614p

But investors needn’t be too downcast; some of the most profitable and fastest-growing parts of the business are doing quite well regardless. Hunting's Subsea, Electronics and Dearborn divisions performed above their comparable levels in 2014. And the group was quick to pare back fixed costs in anticipation of lower capital budgets. As a consequence, Hunting's balance sheet remains solid "with no significant change to the financial position" and gearing at around 11 per cent at the end of April. Even though the group has been decisive on the cost front, its capital investment programme remains on track for the remainder of the year, with construction of new facilities continuing at AmeriPort, Texas; Fryeburg, Maine; and Cape Town, South Africa.