Reduced rig activity in Canada and excess inventories in the US hit Hunting's (HTG) first-half underlying profits to the tune of £7.1m. However, expect a better second half as increased offshore and shale oil drilling in the US will result in a 45:55 split in profitability over the two halves of 2013, according to Dennis Proctor, chief executive of the oilfield services engineer.
Mr Proctor said that a strong performance from the group's expanding Asian division partially mitigated the difficulties in North America, although the Asian supply contracts conducted through the period were on a lower-margin basis. It meant that underlying operating profits fell by 5.4 per cent to £61.2m, on a margin of 14.4 per cent - down 150 basis points on the corresponding period in 2012.
Underlying profits at Hunting's well completion division were up by 3 per cent to £39.4m, with strong demand reported for Hunting Titan's Perforating and Energetics product lines, while approval has been given for the $36m (£23m) second phase of investment at the group's Houma Louisiana facility. The group is moving towards the purchase of two development sites in Texas and South Africa, with a combined capital investment estimated at $74m. Hunting was unable to identify any suitable bolt-on acquisitions through the period, so it opted to reduce net debt by £5m (from the 2012 year-end) to £159m.
Deutsche Bank expects 2013 EPS of 61.5p (57.5p in 2012).
| HUNTING (HTG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 849p | MARKET VALUE: | £1.3bn | |
| TOUCH: | 848p-850p | 12-MONTH HIGH: | 947p | LOW: 716p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 584p* | NET DEBT: | 18% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 407 | 37.2 | 18.8 | 4.50 |
| 2013 | 424 | 38.9 | 19.0 | 4.75 |
| % change | +4 | +5 | +1 | +6 |
Ex-div: 6 Nov Payment: 26 Nov *Includes intangible assets of £510m, or 346p a share | ||||
