Offshore Rig Builder Lamprell Shutters Two Yards
Middle Eastern offshore shipbuilder Lamprell has announced plans to shut down two fabrication yards in the United Arab Emirates in order to reduce cost. Its site in Sharjah will close in late 2020, as soon as it is finished with building jackets for Scotland's Moray East offshore wind farm. Its Jebel Ali plant closed in January.
The closures leave Lamprell with only one waterfront yard, its Hamriyah facility. “The Hamriyah yard is our largest facility and continues to operate, offering various expansion opportunities should [we] require additional space,” said Lamprell in a statement. “These actions allow for [us] to gradually grow fabrication volumes whilst significantly improving efficiency."
The measures will save about $23 million in 2020, including headcount reductions. Lamprell will take a $7.5 million one-off charge for demolition costs and staff termination costs at Sharjah, plus a $13 million impairment charge.
Going forward, Lamprell is aiming to conserve cash and liquidity, cutting capex to a bare minimum at all facilities during this "period of low revenue and slow pace of major contract awards." It is also reducing salaries for its board, management and professional staff by a quarter, and it is reducing hours for others.
Lamprell says that it is also looking to defer the next installment of its planned capital investment at the new International Maritime Industries (IMI) shipyard in Saudi Arabia. IMI is a joint venture between Hyundai Heavy Industries, Saudi Aramco, Bahri and Lamprell, and it is the core component of the new King Salman Complex shipbuilding center at Ras Al-Khair, Saudi Arabia.
So far, the coronavirus epidemic and the related lockdown in the UAE have affected operations at Lamprell's yards only modestly, and work on active projects is continuing. The company has a $470 million backlog remaining, including about $200 million after the end of 2020.