LONDON (Dow Jones)–United Arab Emirates-based oil rig engineer Lamprell PLC (LAM.LN) expects earnings in the second-half of the year to improve on first-half results as Saudi Arabia drives a resurgence of activity in the Middle East rig refurbishment market, Chief Executive Nigel McCue told Dow Jones Newswires Tuesday.
McCue expects refurbishment contracts to rise towards the end of the year and into 2012.
He also expects orders for premium, new build rigs to increase as demand outstrips supply. Global utilization of these rigs is at around 100%, he noted.
“We still feel there’s quite a bit of additional capacity required in the market, certainly the demand is there,” he said.
McCue says Lamprell should be able fulfill all its orders thanks to the acquisition of Maritime Industrial Services Co. Ltd. Inc., or MIS, which has added significant manufacturing capacity and quay-side space.
The integration of MIS started last month, he said, and is already ahead of schedule and remains on target to deliver cost savings of around $11 million a year.
“We’ve started the physical integration of various departments and we expect those to be completed before the course of next month,” he said.
Earlier Tuesday, Lamprell reported an adjusted first-half net profit of $27 million on revenue of $384 million.
Financial chief Scott Doak said analysts are forecasting full-year revenue will be around $840 million, but he reckons the company will beat that forecast. Doak didn’t give a figure but guided towards a second-half, post-tax profit margin of around 9%.
Lamprell has around $90 million in cash, after stripping out second-half commitments, which will be used to bring the MIS yard up to standard, the CFO added.
Shares at 1255 GMT were up 6.3 pence, or 2.3%, at 278.3 pence in a slightly higher FTSE 250 Market–up 1.8%
-By Iain Packham, Dow Jones Newswires