Lamprell stabilises after huge sell off on further contract set backs

Proof that profit warning’s come in three’s with oil and gas rig and vessel constructer, Lamprell, getting hammered once again last week on cost overruns on two wind turbine installation vessels which had a contract value of over $320 million. 

Lamprell shares were trading over 360p in May and today have stabilised at 81p, a 32% drop on the week, valuing it at £211 million. It has net debt of around $100 million after buying Maritime Industrial Services for $336 million in 2011.

As a result of a half year loss of around $45 million, increased from a $7 million loss announced in early May and a $20 million loss announced in June, management said it would be “seeking waivers from certain of its banks in relation to its banking covenants”. Quite a turn around for the one time darling of the oil and gas construction sector. 

Jonathan Silver is stepping down as chairman to be replaced by John Kennedy and he will have his work cut out to repair the tarnished reputation of the company blighted by these profit warnings. Investors are hoping that the “kitchen sink” has well and truly been thrown at the financial outlook but with warnings of possible banking covenant breaches, things couldn’t be worse.

Lamprell was a star performer of this vibrant sector of the market but eye brows were already raised previously in May before the first profits warning when Directors cashed in £1.7 million of shares 2 weeks before the announcement – Integration and development director Scott Doak sold 200,000 shares at 363.7p and vice president Kevin Isles sold 250,000 shares at 361.7p. Not too shabby with the shares at 81p right now, a difference of £1.34 million! A coincidence? Hmmm…….

Contrarian Investor UK