x Abu Dhabi, UAETuesday 12 December 2017

Lamprell to book big loss in 2017 on windfarm costs

Shares of Sharjah-based marine services company plummet after firm says learning curve has proven to be steeper than anticipated

Lamprell said it has overshot on costs for its UK offshore windfarm project.Morgan Sette/Reuters
Lamprell said it has overshot on costs for its UK offshore windfarm project.Morgan Sette/Reuters

Shares of Lamprell plunged by as much as 19 per cent in London on Friday after the Sharjah-based marine services company said it would incur a significant loss in its 2017 profit due to higher than expected costs for its East Anglia One offshore windfarm project off the UK's east coast.

“As announced previously, there were start-up costs and inefficiencies in relation to the project and the learning curve has proven to be steeper than anticipated,” the company said.

“We remain confident of meeting our client’s expectations in terms of schedule and quality but we will incur extra costs to achieve this. As a result, we now expect the project to make a significant loss, which will be booked in 2017.”

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Lamprell said it was working with the client and supply chain to mitigate further costs. It was not in a position to given an accurate estimate of the financial impact of the situation but said that it would make an announcement in due course, it said. While revenues for 2017 will be in line with the company’s current guidance, earnings will be significantly below current market expectations, it added.

The rig maker won last year the US$225 million contract to procure, fabricate and supply 60 foundations to ScottishPower Renewables that will be used to install 102 turbines, each with a capacity of 7 megawatts at the East Anglia One offshore wind farm. This will generate enough power for more than 500,000 homes a year.

“We remain of the view that the renewables market presents significant potential for the growth of the group and we are convinced that the lessons learned from this first project in the sector have strengthened our capabilities,” the company said.

“This will help to position us competitively for future project awards.”

Lamprell shares were down 10 per cent at 62.75 pence late morning in London on Thursday.