27th Aug 2015 06:59
LONDON (Alliance News) - Hunting PLC Thursday said it swung to a pretax loss in the first half of 2015 as revenue plummeted due to reduced activity in the oil and gas sector, leading the company to slash its interim dividend by more than half.
Hunting is following the market trend of slashing costs to battle the downturn in the market, with the FTSE 250-listed company reducing its workforce by 25%.
The FTSE 250-listed oil service company reported a USD65.8 million pretax loss in the first half ended June 30, swinging from a USD68.9 million profit after revenue plummeted to USD463.6 million from USD664.1 million a year earlier due to reduced activity in North America and a decline in the amount of well construction and well completion projects.
On a more positive note, Hunting said its subsea division has benefited from relatively resilient activity in offshore deep water projects.
Before amortisation and exceptional items, Hunting reported a pretax profit of USD17.7 million, which is still significantly down from the USD93.7 million profit the year before. Earnings before interest, tax, depreciation and amortisation fell to USD43.5 million from USD120.9 million.
That led to Hunting slashing its interim dividend by more than half to 4.0 cents per share compared to the 8.1 cents paid in the first half of 2014.
Net debt also experienced a rise to USD166.7 million from USD131.0 million at the end of December, pushing its gearing level up to 12% from 9%.
Hunting, like its peers, is struggling from the downturn in the oil and gas market due to the substantial fall in oil prices since the middle of 2014. The company has slashed 900 jobs since the start of the year, representing around a quarter of its entire workforce, leading to USD41.0 million worth of savings per year.
"The pace of decrease in activity has exceeded industry expectations with management taking actions to reduce headcount and operating costs to align to the current market environment," it said.
Hunting said North America had been worst affected by the downturn, with the rig count falling by more than half since the start of 2015, whilst globally the rig count has dropped about 13%, it said. The amount of rigs in use demonstrates the amount of activity and projects being implemented, and the fall shows how oil and gas companies have cut back on investment and deferred projects.
"Our first half performance has been affected by the downturn across the energy industry with management addressing this market environment with staff reductions and cost saving measures," said Chief executive Dennis Proctor.
"The capital investment projects underway to consolidate operations and position our businesses for the future remain on schedule, as efficiency gains and strategic investments in emerging geographic regions enable new opportunities to be pursued as the global industry evolves," he added.
By Joshua Warner; [email protected]; @JoshAlliance
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