Oil rig maker Lamprell warns on revenue

Oil services company Lamprell has warned that revenue will be lower than expected over the next two years, sending shares down more than 10pc in morning trade.

The Dubai-based British company blamed a drop in orders for its new “jackup” offshore oil platforms, and said that it now expects revenue for 2014 to come in at around $1bn (£606m), compared to $1.1bn last year, while profit margins will remain similar, chief financial officer Joanne Curin said.

The oil rig maker returned to profitability in 2013 after it reported a full-year pre-tax profit of $40m, well ahead of market expectations for pre-tax profits in the region of $32m.

“Lamprell made great progress during 2013, improving project execution significantly and addressing the legacy issues and as a result the company returned to profitability,” said non-executive chairman, John Kennedy.

The company said costs decreased from $ 1.05bn in 2012 to 977m in 2013 and that it expects to maintain profits by cutting costs further until the order book recovers. The upturn comes after a disastrous 2012 when the company slumped to a $115m loss. In what Lamprell described as the most challenging year in its history after the rig maker expanded into riskier areas, such as wind turbine vessels.

A string of profit warnings and the exit of senior executives was blamed on problems with suppliers, cost overruns and project delays as the company more than halved in value.

Chief executive James Moffat described last year as a “turning point” for the group in a statement in which a back-to -basics approach returned the firm to profitability.

Mr Moffat said: “We are the last man standing on a number of contract bids and hope to make announcements on these projects to the market soon.” He added that the pipeline of potential work had increased to $4.7bn at the end of December, up from $4.6bn a year earlier.

Andrew Whittock, oil and gas analyst at Liberum, said: “Last year was another difficult year but the results confirm management has stabilised the business and returned to profitability.”

The shares closed down 10p, to 139p.