Hunting doubles cash profits

Oilfield equipment specialist Hunting (HTG) is turning itself from a market follower into a steadier platform for returns, after raising profits in a weaker year for what was previously its key business. In a slow year for the Hunting Titan US onshore unit, overall sales climbed 28 per cent and cash profits almost doubled, to $103mn (£81mn). 

The rebound was thanks to energy companies buying up Hunting equipment for major new offshore developments in South America, like Guyana.  Ebitda is also set to climb again this year, with guidance at $125mn-$135mn, driven by the same areas of investment. 

Energy markets are in a state of flux, with Saudi Arabia cutting its own output to encourage higher oil prices and US onshore producers limiting growth investment. But Hunting boss Jim Johnson said there would still be steady buying in those countries. “Natural gas drilling [in Saudi Arabia] will continue to grow to meet local demand, underpinning steady activity levels in the year ahead,” he said, also adding that growing US liquefied natural gas (LNG) capacity would similarly drive spending. 

The company marked a new high in non-oil and gas sales as well, driven by its relatively small defence and medicine units, with sales at 8 per cent of the total. The question now is whether these profits and sales levels are sustainable. Sales in 2023 are at the highest level since 2019, when Hunting was also riding a wave of offshore investment and an onshore slowdown. 

For Investec analyst Alex Smith, the answer is yes: “The company has built solid foundations to deliver further growth, with a more diverse revenue mix and higher visibility on earnings,” he said, also forecasting a 29 per cent Ebitda rise in 2025 as well. Buy. 

Last IC View: Buy, 291p, 25 Jan 2024