Struggling oil rig maker Lamprell has issued its fourth profit warning since May, prompting its chairman to call for a change of senior management.
The company has been beset by problems relating to a contract for two windfarm vessels, with late delivery leading to spiralling costs. Now it has also admitted to delays on a separate construction project, meaning it will not receive revenues or profits until 2013, rather than this year.
It has appointed external advisors to assess the full financial impact of these issues, but it said the loss for the year would be significantly greater than it had expected. In August it said losses for the year would be between $12m and $17m.
The company is also in talks with its banks about its covenants, but said it remained confident it would have "sufficient cash flow to fund ongoing activities and debt repayments." Chairman John Kennedy, who joined in June to help turn the company round, said:
I am extremely disappointed in the need to make this latest trading update and feel that a refreshed management team will bring a more focused sense of delivery to all our stakeholders.
An announcement on leadership changes would be made "in the near term" and further updates would be made when the financial impact was clearer.
The company's shares have crashed 32.5p to 77.5p, down 30%. A year ago they stood at more than 260p. Keith Morris at Investec cut his target price from 100p to 55p and said:
We have lost count of the number of profit warnings that Lamprell have incurred in the last 12 months, but it is clear that there is a fundamental issue in the delivery of fixed price contracts which will require a root and branch change of senior management. Until losses are quantified, the banks are mollified and a new team is in place, we would steer clear of the shares.
David Round at Oriel Securities said:
Whilst the additional costs are a further setback for the company, today's announcement does not come as a great surprise as the company flagged at the interim results the difficulties and uncertainties with delivery of the Windcarrier [windfarm] vessels. In our view, the delivery of these vessels, together with the change of management, could be a potential turning point for the company. However we retain our hold recommendation pending further clarification on the impact of the delay in client deliverables, the discussions with lending banks, and the proposed management changes.
