That Lamprell’s (LAM) first half of 2019 was “in line with expectations” is little reason for investor cheer. The engineering group’s gross margin was negative, net cash again fell, and the order backlog declined from $540m (£433m) to $441m.
Much of this could soon be chewed up. Full-year revenue guidance of $275m-$300m, recently narrowed from a previous range of $250m-$400m, means investors probably need more than a weak reassurance that Lamprell is “progressing towards awards” from the $6.3bn bid pipeline.
Unfortunately – though par for the course with long-term, capital intensive oil and gas and offshore windfarm projects – the timing of awards remains “challenging and represents a material uncertainty”. Chief executive Christopher McDonald is confident that, despite delays, tendering activity for Saudi Arabia’s long-term offshore programme will bear fruit.
It had better. Negative cash flow means clients and shareholders will want greater clarity on the group’s capital resources. When we last visited the beleaguered group, terms for a new debt facility were expected to be signed by the end of June. Six months on, and investors have the lukewarm assurance that a new agreement is being negotiated, with the current facility extended until mid-December.
Consensus forecasts are for a full-year loss of 21¢ a share, narrowing to a loss of 5¢ in 2020.
| LAMPRELL (LAM) | ||||
| ORD PRICE: | 47.1p | MARKET VALUE: | £ 161m | |
| TOUCH: | 47.1-47.8p | 12-MONTH HIGH: | 71p | LOW: 45p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 42.3¢ | NET CASH: | $50.2m* | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2018 | 155 | -20.9 | -6.42 | nil |
| 2019 | 106 | -51.9 | -15.2 | nil |
| % change | -31 | - | - | - |
| Ex-div: | n/a | |||
| Payment: | n/a | |||
| £1=$1.25. *Excludes lease liabilities of $60.5m | ||||
