Lamprell has revised projected losses for 2012 to around US$105 million.
The UAE-based rig builder's estimate was increased from a figure previously released by the company on 28 August, 2012 and was due to “additional losses and delays or deferrals on a number of individual projects.”
“This review has revealed a much greater loss for the year than previously announced or anticipated, and naturally I am very disappointed,” said John Kennedy, chairman of Lamprell. “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 and to take appropriate steps to mitigate or address the issues.”
The company’s windcarriers 1 and 2 were responsible for the greatest losses amounting to $9.7 million and $18.2 million respectively. Lamprell’s Caspian Sea jack-up project will also see a shortfall of $24.6 million due to low labour productivity and restricted equipment availability at a third party facility. The offshore platform project saw delays which will see its gross margin figure of $9.3 million deferred to 2013.
Other issues such as the delay in mechanical completion on a minor EPC project increased costs by $6.1 million, timing shift on projects cost the company $8 million, increased advisory and banking fees an additional $4 million while bad debts and other losses added another $8.1 million to the mix.
“The outcome of this review vindicates the Board’s earlier decision to restructure the management team,” said Kennedy. Peter Whitbread was re-appointed to the board and as chief executive officer and the group also added Frank Nelson as chief financial officer and Alex Ridout as company secretary and general counsel.
With the new management, the company said in a statement that it will “refocus on projects which are closer to the core business of Lamprell. In this way, the company can leverage its historical strengths and move forward positively.”
According to the statement, the company will focus on new-build jack-up rigs and rig refurbishment. In the short to medium term, the group’s order book of secured contracts is expected to the business’ recovery through to the end of 2013. Longer-term the company expects that bidding activity will support its recovery with the pipeline totalling more than $4 billion.”
“The company expects 2013 to be a recovery year, with revenue broadly flat compared to 2012 and a gradual return to profitability during the year,” it said in a statement.
In September, the company signed into a joint venture with Shoaibi Group and Al Yusr Townsend and Bottum L.L.C. to carry out new-build fabrication, refurbishment and repair of land drilling rigs in Saudi Arabia.