29th Jun 2021 10:26
(Alliance News) - Hunting PLC on Tuesday predicted a "modest loss" in the first half of 2021, noting that promising onshore oil activity was offset by lower performing offshore and international businesses.
Shares in Hunting were trading down 0.6% at 243.50 pence each in London on Tuesday morning.
The London-headquartered provider of tools and components for oil and gas extraction said it expects earnings before interest, tax, depreciation and amortisation for 2021 to sit below previous expectations, with a potential earnings shortfall leading into 2022.
Nevertheless, Hunting said it expects to outperform its 2020 full year results, when Ebita had collapsed to USD26.1 million from USD139.7 million in 2019.
Hunting will record a "modest loss" in Ebitda terms in the first half, it said; however it was Ebitda positive in the second quarter after a loss in the first quarter.
Hunting said its onshore exploration and core Titan business traded ahead of expectations in the first half of 2021, with monthly revenue growing at Titan in May and June.
Titan manufactures perforating gun systems, shaped charges, well logging instrumentation, and other oil drilling tools. Titan's preloaded perforating gun drew particular interest from the US onshore market in the first half, Hunting said.
In contrast, international and US offshore oil and gas activity lagged, reducing Hunting's expectations for the full year.
Activity remained slow in the North Sea for Hunting's EMEA segment.
Elsewhere, "Asia Pacific operating segments continue to experience challenging trading conditions given the ongoing impact of Covid-19, with OPEC production constraints also continuing to depress drilling activity across the Middle East, further exacerbating the recovery within these segments," Hunting Chief Executive Jim Johnson noted.
Accessories manufacturing also fell due to slow offshore and international drilling for the firm's enlarged US and Canada segment despite good trade in its premium connections, trenchless and subsea businesses. Hunting completed the merger of its US and Canada operations in January.
Meanwhile, as oil and gas sales dropped for Hunting's advanced manufacturing group, orders from medical, aviation and space businesses increased.
Hunting said its balance sheet remains strong, with net assets of USD950 million and total cash over USD100 million.
With regard to outlook, Johnson noted that: "Given the stronger oil price environment, we believe that as client cash flows improve capital expenditures will also increase, leading to robust demand for the group's products and services supported by a significantly improved outlook for the industry for 2022 and beyond."
By Scarlett Butler; [email protected]
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