Full-year results from oil and gas well specialist Hunting came in slightly ahead of consensus, with pre-exceptional operating profit of £35.8m compared with £58.8m in 2008. An abysmal year for the well construction segment - which suffered from the collapse of US gas exploration drilling in 2009 - saw an underlying operating profit contribution of just £3.3m compared with £13.5m in 2008, with operating margin dropping from 12 per cent to 4 per cent.
The core well completion segment - dependent on customers bringing production onstream - was more resilient, with underlying operating profit of £20.3m compared with £26.6m in 2008, and margin dropping from 14 per cent to 11.5 per cent. Chief executive Dennis Proctor says this performance is down to national oil company clients across Asian and Midled Eastern markets continuing with development plans, evident in strong growth in revenues booked through Singapore from £32.9m to £38.1m. Hunting has long identified Asia as its major growth opportunity, and should complete a new £10m manufacturing facility in China in May to better serve this market.
Away from the well construction and completion businesses, the non-core field aviation subsidiary saw fantastic improvement in profitability, with operating margin growing from 3 to 14 per cent on essentially flat revenues. Mr Proctor says this is simply down to new management at this business, which he hopes to divest in the coming year. Hunting itself remains acquisitive, with another three bolt-ons bought in 2009 - a subsea equipment producer in Texas, a tubular fabricator in Indonesia and a global well-tool provider with bases in Scotland, Dubai and Singapore.
Mr Proctor says he expects 2010 results to be better than 2009 - the international well completion business continues to hold up, and US well construction in particular is benefiting both from a crude oil price-driven surge in oil exploration and also a welcome pick up in gas drilling activity, as gas prices have recovered from their nadir last year.
Evolution anticipates full-year 2010 pre-exceptional EPS of 16.95p, compared with 2009 actual pre-exceptional EPS of 17.7p.
| HUNTING (HTG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 605p | MARKET VALUE: | £799.9m | |
| TOUCH: | 604-605p | 12-MONTH HIGH: | 616p | LOW: 375p |
| DIVIDEND YIELD: | 2% | PE RATIO: | 33 | |
| NET ASSET VALUE: | 425p | NET FUNDS: | £365m | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 1.52 | 40.9 | 21.2 | 6.00 |
| 2006 | 1.81 | 80.8 | 37.6 | 7.50 |
| 2007 | 0.40 | 45.0 | 16.9 | 8.25 |
| 2008* | 0.42 | 5.70 | -3.60 | 9.90 |
| 2009 | 0.36 | 39.1 | 18.2 | 10.5 |
| % change | -14 | +586 | na | +6 |
Ex-div: 3 Mar Payment: 31 Mar *Restated | ||||
