Lamprell, the UAE oil-rig maker, aims to stabilise its finances this year by bidding more conservatively on new projects.
Lamprell aims to fix finances
Lamprell, the UAE oil-rig maker fined this week for failing to bring negative financial warnings to the market fast enough, aims to stabilise its finances this year by bidding more conservatively on new projects.
The company, with shipyards in Jebel Ali, Sharjah and Hamriyah, yesterday posted a loss of US$110.5 million (Dh405.8) forlast year, compared with a profit of $63.3m the year before. Bids this year will focus on the company's core oil and gas expertise and avoid excessive financing burdens or uncontrolled costs, said Jim Moffat, the chief executive who assumed the job this month.
"You get a project and you either win it or lose it, and if that's all you do, what you win could be quite shambolic," Mr Moffat said. "We're expanding the management to have more checks and balances. Rather than run the facility as a series of stand-alone siloed projects, we're trying to look at facilities management as well and be a little bit more strategic in terms of projects that we win."
This week the United Kingdom's Financial Services Authority fined the company £2.4 million (Dh13.3m) for failing to alert investors quickly enough of potential profit setbacks.
In May, Lamprell began issuing the first of four profit warnings centring on delays and cost overruns during the building of an offshore wind turbine carrier, a fresh foray into renewables for the oil-rig builder.
"When we look at the risk profile in the project, we actually did not control much of the risk that affected our bottom line," said Mr Moffat in a telephone interview from the UK, where top executives were meeting with investors. "That was a novel vessel. It was in a market that we really didn't know, for a very difficult client, a very commercially focused client."
From now on Lamprell will focus on the rig needs related to old-school fossil fuels, he added. He referred to the North Sea and Middle East as core markets with lots of opportunities for the firm.
"We're not going to take on a project that we don't have a fundamental knowledge in," said Mr Moffat.
Lamprell has a $1.3 billion order backlog, and its working capacity for the year is 85 per cent committed to existing projects. It expects to fill out its order book with rig repairs and expects to maintain the size of its UAE facilities and workforce of 11,000 people.
"We're very fortunate in that we've got a big backlog in our core business," said Mr Moffat. "I don't see the business getting smaller as we move forward."
Lamprell shares climbed more than 4 per cent to 148 pence yesterday at midday trading in London.
Mr Moffat is one of a series of new faces after a management shake-up in October, when three directors left the board including the former chief executive Nigel McCue.
"We're over here this week to meet existing and potentially new shareholders," said Frank Nelson, who was named chief financial officer yesterday after serving as interim. "The best way that we can serve shareholders and to regain their confidence is by delivering."