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UPDATE 2-Lamprell says change of focus will reverse $100 mln loss
March 21, 2013 / 7:42 AM / 5 years ago

UPDATE 2-Lamprell says change of focus will reverse $100 mln loss

* $105 mln 2012 loss vs $74 mln 2011 profit

* Sees gradual return to profit this year

* Order book at $1.3 bln, bid pipeline of $4.1 bln

* No 2012 dividend

* Shares up 4.4 pct

By Lorraine Turner and Rhys Jones

LONDON, March 21 (Reuters) - Oil rig maker Lamprell charted the “back to basics” strategy it says will return it to profitability by 2014 after swinging to a $105 million loss in the most challenging year in its history.

Rapid growth in recent years prompted the oil services company to expand into riskier areas, such as wind turbine vessels, where operational difficulties led to a series of profit warnings last year.

“We probably took on risk that we didn’t fully control; getting back to basics is about focusing on the core business,” new chief executive Jim Moffat told Reuters on Thursday.

“The good news is that there is a lot of core business around right now; we don’t have to shrink,” he said, citing the North Sea and Middle East.

The FTSE 250 company’s 2012 loss of $105 million before tax and exceptional items, against a 2011 profit of $74 million, was in line with expectations. Revenues fell 8.8 percent to $1.05 billion.

Late last year the oil services company said it expected a total loss of about $105 million, having previously forecast a loss of between $12 million and $17 million.

Nigel McCue stepped down as chief executive in October after profits were hit by problems including delays to the delivery of lifeboats for offshore wind farm installations.

“2012 was unquestionably the most challenging year in Lamprell’s history,” Chairman John Kennedy said in a statement on Thursday.

“The board expects 2013 to be a recovery year, with stable revenues as compared to 2012 and a gradual return to profitability during the year.”


The Dubai-based company was stung earlier in the week with a 2.4 million pound ($3.6 million) fine from Britain’s Financial Services Authority for failing to keep the market fully informed of its deteriorating financial position last year.

The regulator said the penalty for Lamprell was the first under tougher new policy for such rule breaches, basing fines on a company’s market capitalisation.

CEO Moffat was sanguine on the unprecedented fine, saying: “The fine simply draws a line under the whole thing ... we felt it was more appropriate as a management team to simply accept our medicine and move on.”

Lamprell has a current order book of $1.3 billion and a bid pipeline of $4.1 billion, with 85 percent of 2013 booked and more than 30 percent booked for 2014, Moffat said.

Shares in Lamprell, which have fallen 57 percent over the past year, were up 4.4 percent at 0943 GMT, outperforming a 0.3 percent decline in the FTSE 250 index.

“For investors prepared to look forward to 2014, we believe Lamprell still offers significant upside,” Liberum analysts said. “The outlook statement is positive, emphasising the return of the stability to the business, a focus on core capabilities and the ongoing support from customers.”

Lamprell, which confirmed the permanent appointment of interim Chief Financial Officer Frank Nelson, also announced that there would be no full-year dividend and that it would review its payout policy once the business returns to profitability.

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