The first half of 2014 provides the clearest evidence yet that Lamprell (LAM) is back on track after the lows of 2012. Back then, the specialist rig engineer announced a succession of profit warnings, which culminated in a £2.4m fine from the UK Financial Services Authority for inadequate market disclosure.
Two years on and the turnaround strategy put in place by chief executive James Moffat has delivered interim operating profits of $53.4m (£32.2m), against $19.2m last year. More importantly, Lamprell has rebuilt its order book and is strongly capitalised following a major rights issue and debt refinancing. Admittedly, with four major projects completed during the period, Lamprell’s revenues will be heavily skewed towards the first half. But management nonetheless reckons the full-year financial performance will be ahead of market expectations.
Management has focused on converting the company’s bid pipeline into firm orders. Lamprell has secured $900m in new projects since the beginning of the year, swelling its order book by a third to $1.2bn. The orders in place are primarily for new-build jackup drilling rigs. However, there is a broader mix of engineering remits within Lamprell’s $4.9bn bid pipeline, which should allow the company to achieve its key strategic objective of diversifying its revenue streams.
The results prompted Investec to raise its full-year EPS estimate by 9 per cent to 20.9¢, falling away to 20.8¢ in 2015.
| LAMPRELL (LAM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 156p | MARKET VALUE: | £533m | |
| TOUCH: | 155-156p | 12-MONTH HIGH: | 166p | LOW: 111p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 7 | |
| NET ASSET VALUE: | 186¢* | NET CASH: | $281m | |
| Half-year to 30 June | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2013 | 507 | 12.3 | 2.5 | nil |
| 2014 | 632 | 46.5 | 26.9 | nil |
| % change | +25 | - | - | - |
Ex-div:- Payment:- £1 = $1.66 *Includes intangible assets of $209m, or 61¢ a share | ||||
