Lamprell warned that its full-year loss would be seven times greater than previously forecast as it unleashed its fifth profits warning since Spring. But shares soared 14% as the group removed the uncertainty which had been dragging them down for months.
The United Arab Emirates-based, London-listed company forecast a $105 million (£66 million) loss for the year — as opposed to its previous estimate of between $12 million and $17 million – after consultant PricewaterhouseCoopers conducted a thorough review of its books. Shares, which have lost nearly three-quarters of their value this year, jumped 9.50p to 78.75p on the news.
Bank of America Merrill Lynch upgraded its rating from “Sell” to “Buy” and analyst Fiona Maclean said: “Today’s statement delivers the largest profits warning to date. However, this looks to draw a line under the issues faced by the troublesome projects. While the company is not out of the woods, we believe this is a significant milestone.”
Lamprell has been hit by cost overruns and late-delivery penalties on a $320 million contract to deliver two windfarm installations. It will also take a $24.6 million hit this year on a “jack-up” oil rig project in the Caspian Sea, which Lamprell blames on “low labour productivity and restricted availability of equipment at a third-party facility”.
Lamprell, which ousted chief executive Nigel McCue and brought back its former boss Peter Whitbread last month, said it had a strong pipeline of projects and expected “a gradual return to profitability” next year.
Whitbread will run the company until a replacement is found.
Analysts believe Lamprell will break even or make a small profit in 2013, before moving onto a larger surplus the following year.
John Kennedy, who joined Lamprell as chairman five months ago to help turn the company around, said he was “very disappointed” by the scale of the latest loss forecast. “However, having now identified the issues and their potential financial impact, the group is in a much better position to draw a line under these events,” he said.
