Lamprell dives on supply chain issues

Oil and gas engineering firm Lamprell has seen its share price plunge after it warned that its performance is being severely hampered by the paucity of specialised jack-up rig components.

The group said it will most likely make a small loss in the first half of the year, though a recovery is expected in the second half.

Full year revenue is expected to be broadly in line with the previous year at $1,100m with a net profit margin of around 3.5%, considerably below the board's expectations for the year.

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The share price plummeted 65.71% to 101.10p in early trading.

The decline in the profit margin is being blamed on further costs related to the final specialised equipment commissioning on, and the delivery of, the wind farm installation vessel projects Windcarrier Brave Tern and Seajacks Zaratan, as well as progressive delays in key specialised vendor equipment deliveries for new build jack-up projects. Delayed equipment deliveries also had a significant effect on revenues.

The firm said it believes that the group's margin performance will recover in 2013.

In a statement the company said: "In light of the reduction and timing of our projected revenue for 2012 we are reviewing our cost base and adjusting it accordingly. We see continued strength in our operating markets, our bid activity remains at a historically high level and the board remains optimistic that the long term prospects of the group remain promising.

"The group maintains a substantial order book extending to Q1 2015 which at the end of April was $1,579m."

The firm's net debt at May 14th was $173m, representing an increase of $71m since December 31st. However, the company anticipates that, upon delivery of the Seajacks Zaratan and Hull 108, the majority of the syndicated loan facility entered into in connection with the acquisition of Maritime Industrial Services will be repaid.

NR