UAE-based rig builder Lamprell has reduced its administrative staff by 20 percent ahead of what the company says might be its toughest year yet.
Lamprell said in the 2016 financial results statement on Friday that the reduction in administrative staff was achieved through several rounds of redundancies. In addition, the management structure was amended to become more flexible at a lower cost, the company further said.
These administrative reductions and other overhead cuts are expected to deliver $23.4 million of annualized savings in 2017.
John Kennedy, Lamprell Executive Chairman, said: “The turbulence in the oil & gas market continued throughout 2016 and Lamprell has had to adapt its business to respond to the changing market. Looking ahead, whilst there are early signs of recovery appearing, we expect that 2017 will probably be the toughest year to date for Lamprell. The timing of our projects partially shielded us from the full impact of the downturn, but the Group is now shifting from a period of record activity in its facilities to a quieter 2017 as projects have progressed to final stages.”
The company started shrinking its organization in early 2016 to align with the expectations for the year ahead.
Christopher McDonald, Lamprell CEO, commented: “The overhead reduction effort has continued this year. As the market downturn deepened and in anticipation of a difficult year in 2017, we had to right-size the organization to align it with the expected lower levels of activity.”
McDonald also said that 2017 is expected to be the company’s most difficult year yet. However, looking ahead, he said that the company is starting to see early indications that a market recovery isn’t too far away.
“2018 is expected to start seeing a pick-up in market activity,” McDonald said.
During 2016, the company’s revenues fell to $705 million, when compared to $871.1 million in the year before.
The company posted a loss of $182.2 million, impacted by an exceptional non-cash goodwill impairment charge of $180.5 million. In 2015, the company reported a profit of $66.5 million.
For 2017, Lamprell expects revenues to be in the lower half of the $400-500 million range in the absence of large project deliveries in the second half of the year.
Offshore Energy Today Staff