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Oil and gas engineering and contracting services provider Lamprell plc (LSE:LAM) warned today it will end the current fiscal year at a loss “significantly greater” than previously estimated and said it plans to appoint external advisors to determine how much the loss will be, following several delays in delivery of projects during the year.
Back in July 2012, Lamprell said its half year loss was expected at US$45 million due to additional costs arising from delayed deliveries of two jack-up installation vessels to marine service vessels provider, Fred. Olsen.
Lamprell now stated that the anticipated loss for the year will be more than the US$12 million to US$17 million it projected more than two months ago, as the 2012 year-end revenue will drop from the earlier US$1.1 billion estimate.
The announcement prompted investors to abandon ship and traded over 14 million shares by midday in London, resulting in a 31.6% drop of Lamprell’s share price on the London Stock Exchange to a three-year low of 75.25 pence.
Market capitalisation of Lamprell was reduced to more than a third of its value back in May when the company said it will incur a “small loss” in the first half the year, following a tightening of global demand for specialised jack-up rig components, with an expected recovery – however, less than the Board’s target – during the second half.
Lamprell is now saying, however, that an independent assessment is needed to determine the “full extent” of the financial impact the delays will put on the firm’s 2012 balance sheet.
The Arab Gulf-based builder of rigs used in the onshore and offshore oil and gas industries said further delay in client deliverables at one of the firm’s existing projects will move the timeline of the anticipated revenue and profit until next year.
According to Lamprell, nonetheless, “there has been no deterioration in the project’s expected financial performance”, with the order books still standing at US$1.5 billion but the realisation of revenue and profit will be delayed.
That fact did nothing to appease even the firm’s Chairman of the Board, John Kennedy, who plans to shake the leadership and senior management team “to ensure Lamprell begins to rebuild its reputation with both investors and customers.”
“I am extremely disappointed in the need to make this latest trading update and feel that a refreshed management team will bring a more focused sense of delivery to all our stakeholders,” Mr. Kennedy stated, in reaction to the impending negative income statement by the end of 2012.
Company Spotlight
Lamprell plc is a diversified engineering and contracting services provider to the oil and gas and energy sectors based in the United Arab Emirates. In 2011, the company made US$1.1 billion in revenue and US$63 million in profit, providing dividend per share of 12 cents.
