3rd May 2016 14:44
LONDON (Alliance News) - Lamprell shares fell on Tuesday after the company said it plans to cut another substantial chunk of its workforce and admitted the search for a new chief executive is taking longer than expected, prompting outgoing CEO James Moffat to stay a while longer.
Lamprell shares were trading down 6.6% to 81.0 pence per share on Tuesday afternoon, contributing to the overall 19% fall in the company's share price since the start of 2016.
Moffat announced his plans to retire back in August, agreeing to stay on until the end of June 2016 to help search for a successor. As a result, John Kennedy was placed in charge as executive chairman to help facilitate the transition.
However, Lamprell said both have now agreed to stay in their respective roles until the end of 2016, but said they will leave before this should a successor be found earlier. But, it still means the new head could potentially be entering Lamprell up to six months later than originally planned.
It also means Lamprell has been unable to find a suitable replacement in the last nine months.
Lamprell and the wider oilfield service industry is facing a particularly tough time at the moment as the knock on affect of the fall in oil prices which began back in the middle of 2014 begins to trickle through to the sector, causing a lull in activity and shrinking order books.
Analysts have agreed 2016 will be equally as tough for Lamprell, but have also warned 2017 will be the toughest year, causing a big challenge for anyone coming in to takeover as chief executive. Lamprell itself has warned revenue and its wider financial performance will fall this year and has remained quiet over its prospects beyond that.
Lamprell's pretax profit fell 28% in 2015 after its margin was squeezed and revenue dropped 19%, and it forecast a further 5.0% fall in revenue this year. Its order book is also shrinking and its order backlog is decreasing.
The additional news Tuesday that another 100 people will face job cuts will not help instil belief things are getting better for the company, with that chunk of job cuts representing around 8.0% of Lamprell's overall workforce.
"Given the continuing challenges in market conditions and as the construction cycle of current projects moves towards completion, the group is implementing a number of cost saving measures in its fixed and variable costs," said Lamprell.
"In continuation of the earlier overhead reduction programme, the group has taken immediate steps to reduce its management, professional and administrative headcount," the company added. "This includes project support personnel, as some of the ongoing projects reach completion, as well as back-office staff. The group is also targeting other operating and overhead savings."
Once Moffat retires, he will have a one-year consultancy agreement with Lamprell to remain involved in the company, which has now also been extended until the end of March 2017 following the extensions on Tuesday.
By Joshua Warner; [email protected]; @JoshAlliance
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