There’s no denying the last three years have been tough for oil and gas services stocks. But those Lamprell (LAM) investors patient enough to have stuck with the engineering group this far may be wondering when the turnaround is due. Although only just recovering against the broader market, shares in the likes of Weir Group (WEIR) and Hunting (HTG) have shown a lot more fight.
Dampened sentiment towards Lamprell, accelerated by an October note from Arden Partners that pointed to further margin pressure, has been well founded. Indeed, full-year results for 2017 showed a concerning development: cost of sales that exceeded revenues by $50.2m (£35.6m), largely due to a painful $80m loss on the East Anglia One windfarm project for ScottishPower Renewables.
Chief executive Christopher McDonald spoke candidly of his disappointment in the company’s work on the project, but believes Lamprell can still emerge as a competitive player in offshore wind. The reputational hit would be less of a concern were the year-end backlog not down to just $138m, equivalent to just over a third of 2017 revenues. Worse, major project awards are still unlikely to result in revenue growth until next year.
On average, analysts expect an adjusted pre-tax loss of $55.8m and a loss per share of 19¢ this year, compared with estimates for losses of $91m and 7.7¢ in 2017.
| LAMPRELL (LAM) | ||||
| ORD PRICE: | 67p | MARKET VALUE: | £230m | |
| TOUCH: | 67-68p | 12-MONTH HIGH: | 125p | LOW: 57p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 135¢ | NET CASH: | $244m | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2013 | 1.07 | 37.8 | 12.7 | nil |
| 2014 | 1.08 | 93.7 | 29.5 | nil |
| 2015 | 0.87 | 67.0 | 19.5 | nil |
| 2016 | 0.70 | -182 | -53.3 | nil |
| 2017 | 0.37 | -97.9 | -28.7 | nil |
| % change | -47 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| £1=$1.41 | ||||
