Lamprell Trading Update
Wednesday 18 July 2018
Lamprell announced the following update on its performance in the year to date.
Operational update
Lamprell have made good progress on the East Anglia One offshore windfarm project (EA1 Project) with costs trending within their previous guidance. Earlier this week the last remaining fully-assembled jackets were loaded out from our yards in the United Arab Emirates and are currently on vessels being transported to the ScottishPower's marshalling facility. This completes shipments to ScottishPower from Lamprell's yards in the UAE. Meanwhile, Lamprell's subcontractor in Belfast continues to progress assembly of the part-fabricated jackets which are scheduled to be delivered later this year.
Lamprell's other projects have been proceeding as planned. In April, they successfully completed the major upgrade to the mobile operating unit Haven and delivered it to their client, Master Marine, on time and on budget.
Lamprell have also recently completed a minor project for fabrication of mud systems for use by a key client on their land rigs.
They continue to see a steady flow of smaller rig refurbishment projects through their yards, having completed a total of 16 such projects in the year to date with a further six ongoing currently. Lamprell view this as indicative of a positive trend for the jackup rig market in the Middle East region as clients look to de-stack their rigs and renovate them prior to redeployment.
As per the Company's recent announcement, the development of their local capabilities and presence in Saudi Arabia remain a key focus for management. The IMI yard project is making progress towards construction phase and Lamprell will provide a more detailed update at the time of their half-year results.
Financial position and outlook
Lamprell maintain their previous guidance range for revenue projections in 2018. There have been good levels of walk-in work which has resulted in 95% coverage for the bottom of the US$225-300 million range. Therefore Lamprell expect to deliver an outturn for the year in-line with this guidance, although results for 2018 will be significantly weighted to the first half of the year due to the scheduling of current projects and timing of new awards.
Lamprell's financial position remains solid, supported by the Company's robust balance sheet, and they expect to have a net cash position in the region of US$165 million at the end of the half-year period, subject to audit. In line with their guidance, the cash position has trended downwards since the start of the year. This is as a result of the expected working capital draw by their projects and the planned inventory investment during the period. Net cash will continue to trend moderately downwards during the second half of 2018 as a result of the anticipated capital investment in the IMI yard for this year, the final payment for inventory as well as lower activity levels.
Although the market environment remains highly competitive, tendering activity has increased significantly during the period as Lamprell are currently bidding a number of major opportunities in both of their targeted end markets of oil & gas and renewables, and they are actively engaged in discussions with different potential clients for new projects in their key markets. Lamprell's investment in new people with extensive experience and skills has supported their ability to access new potential customers in those markets. While this is indicative of an improved outlook for the energy industry, Lamprell continue to not expect revenue growth until 2019.
Lamprell will announce its 2018 interim financial results on 20 September 2018.