Oil rig construction and refurbishment specialist Lamprell (LAM) gains 8.9% to 61p as investors look past a one-off charge associated with late delivery of a rig to concentrate on a resilient underlying first half performance.
The UAE-based business says 2016 revenue will be slightly behind analyst expectations as it takes a $25 million hit based on the deduction agreed with drilling contractor Ensco after a rig was delivered late.
Despite this impact, revenue is up nearly 30% year-on-year to $451.3 million in the first half, mainly due to the phasing of construction activity.
And if you put the Ensco-related costs to one side the gross margin improved from 11.6% to 13.1% year-on-year, with profit after tax and exceptional items increasing from £20.3 million to $30.6 million.
According to the company the problems with the Ensco rig relate to technical defects on jacking equipment provided by oil services business Cameron and it has signalled its intent to recover all remedial costs as well as seek compensation. These issues have now been resolved and the company plans to deliver all the remaining rigs affected by this issue in the next eight months.
The company says a 'challenging environment' will persist through 2017 with revenue expected to be in the region of $400 million to $500 million.
New chief executive Christopher McDonald moves into the hotseat from the beginning of October and is expected to downsize operations to reflect the difficult market conditions.