UAE-based rig builder Lamprell expects its 2017 revenue guidance to be at the lower end of the previously expected amount. As low activity levels bite, the company is sticking to its previous revenue guidance for 2018 and expects no growth until 2019.
The rig construction specialist said in an update on Wednesday that its revenue for 2017 was expected to be at the lower end of the guidance range of $370-390 million. The company also said it expected to have a year-end net cash position of around $255 million, which is after taking account of approximately $50 million of negative cash flow from the challenging East Anglia One offshore wind farm project (EA1 Project) in 2017.
The net cash position is planned to trend downwards during the course of 2018 as a result of the investment in the Saudi Maritime Yard, payment for inventory and the cash impact of the remaining losses on the EA1 Project which are expected to total $30 million.
When it comes to its progress on the joint venture from 2017 with Saudi Aramco, Bahri and Hyundai Heavy Industries for a maritime yard development in Saudi Arabia, Lamprell said that the Maritime Yard continued to progress positively and to schedule. The newly-formed joint venture company has recently been named “International Maritime Industries” or IMI.
Given the expected low activity levels later this year, Lamprell remains heavily focused on converting its bid pipeline and rebuilding order book.
Lamprell said: “Bidding activity levels are positive in our key markets and we aim to leverage our client relationships and strengthen our competitive position in order to rebuild our backlog, although we do not expect to see revenue growth until 2019 on the basis of awards no earlier than late 2018.”
“As a result, we maintain our previous guidance for 2018 revenues and expect trading to be significantly impacted by the lower activity levels and the fact that the 2018 revenues on the EA1 Project (which comprise approximately 25% of our 2018 projected revenues) will be at zero margin,” the company added.
Lamprell noted that its focus was on developing presence in Saudi Arabia and in the renewables sector whilst also being ready for the recovery in oil-related markets.
Christopher McDonald, Chief Executive Officer said: “We expect the market to remain challenging in 2018. However, the increased activity in our bid pipeline and the progress with the Maritime Yard in Saudi Arabia provide us with optimism and a path to support long-term, sustainable growth.”
Offshore Energy Today Staff