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Lamprell expects 2019 results to remain under pressure amid tough oil and gas market

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Oil rig supplier Lamprell PLC (LON:LAM) expects 2019 results to remain under pressure after volatility in the oil and gas sector and operational challenges at a major project led to heavy losses last year.

The company made a US$70.7mln loss last year, compared to a loss of US$98.1mln in 2017, driven by losses at the East Anglia One offshore windfarm project due to costs related to supporting a Belfast-based subcontractor that ran into financial difficulties.

READ: Lamprell jumps as it is selected as contractor for Saudi Aramco offshore investment programme

Revenue fell to US$234.1mln from US$370mln a year ago, reflecting a weaker oil and gas market.

“The oil & gas industry is now in its fifth year of downturn and instability,” said non-executive chairman John Malcolm.

“We experienced widespread optimism early in the year only to see the oil price slump dramatically late in the year.

 “The current uncertainty affects capital expenditure in the sector, meaning that our traditional sources of revenue remain inaccessible in the near future. “

The company’s net cash position plunged to US$80mln at the end of 2018 from US$257.mln the previous year, due spending on the construction of the International Maritime Industries maritime yard in Saudi Arabia, rig kit inventory and the East Anglia One project.

Looking to the 2019 fiscal year, Lamprell expects revenue of US$250mln to US$400mln. However, it expects the results will remain under pressure at the current revenue levels and cost base requirements for the group.

“The outlook for the oil & gas industry, although improving, still shows elements of volatility,” said Malcolm.

“I do not expect the global new build jackup rig market to recover in 2019, but our presence in Saudi Arabia has provided us with rare revenue opportunities in this segment.

 “Our focus on the renewables market will continue and, with our traditional sources of revenue expected to resume in the medium term, global fabrication capacity may come under pressure which will improve the market and pricing dynamics throughout the value chain.”

Story by ProactiveInvestors


Source: https://www.proactiveinvestors.com/companies/news/216921/lamprell-expects-2019-results-to-remain-under-pressure-amid-tough-oil-and-gas-market-216921.html


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