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Lamprell forecasts weaker revenues

Middle East yard sees tougher 18 months ahead but holding out for pick-up in market conditions

Lamprell has dropped its revenue forecast for the year and sees the top line sliding further next year as it waits for a boost from an expected market upturn.

The Middle East shipyard, which reported a miniscule first-half profit on dwindling revenues, is, however, looking to boost its presence as an engineering, procurement and construction contractor.

The United Arab Emirates-based company has dropped its full-year revenue forecast to between $370 million and $390 million due to a lack of orders and slow walk-in work. It also now expects next year's revenue figure to be some 10% off what it expects to make this year.

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Lamprell had previously said that its 2017 full-year revenue forecast was "expected to be in the lower half of the $400 million to $500 million range in the absence of large project deliveries" in the second half.

Shares in the company slumped more than 8% in London by 10:30am local time on Friday.

Market conditions are, however, seen warming up, although this is expected to take some time to translate into actual booked revenues, with no top line growth seen until 2019.

"Despite the widely reported market downturn in 2017, there are early indications of a potential market recovery," Lamprell said on Friday as it reported first-half profit of just $1.07 million, up from a loss a year earlier of $4.37 million.

"We are seeing improved bidding levels, both in our core markets and especially in the renewables sector, and our bid pipeline has grown to $3.1 billion from $2.5 billion at the end of 2016."

The company moved more into the renewables sector once offshore oil and gas orders started drying up, clinching work on the East Anglia One wind farm project.

"As we move through project execution, we are on a learning curve with start-up costs and inefficiencies which we are working through. Although this will impact our margins on this first project, it has reinforced our view of the significant potential that the renewables market presents to the growth of the group.

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"Furthermore, and given our experience in constructing complex jack-up wind farm installation vessels, we are seeing an increase in bid requests for both foundations and installation vessels."

The company has been steadily moving towards more EPC work in the offshore market and said on Friday that it is in talks with "a small number of established and reputable partners to bid for much larger scale projects in new geographies," without giving further detail.

Lamprell's revenues slumped to $159.17 million in the first half, down from $451.33 million a year earlier. However, it salvaged the bottom line as the cost of sales also tumbled from $423.8 million to $138.53 million.