Hunting hikes guidance after strong first half

(Sharecast News) - Engineering firm Hunting said in a trading update on Thursday that its first-half performance surpassed management expectations, as it lifted its guidance for the full financial year. The London-listed company said it experienced strength across most international markets, resulting in both revenue and operating profit exceeding the targets set at the beginning of the year.

Additionally, its performance had significantly outperformed the comparable period in 2022.

The firm estimated that EBITDA for the six-month period would be in the range of $48m to $50m.

Hunting said its sales order books remained robust across all product lines, with its position as at 30 June estimated to be between $530m and $550m, compared to $473m on 31 December.

The company's North America segment reported a performance that exceeded expectations, mainly driven by international orders for South America, significantly contributing to the performance of the US manufacturing business.

Additionally, the international revenue of Hunting Titan - a segment focusing on US completion techniques and technology - was steadily growing, with stable operating profits during the period.

The subsea technologies segment saw growth in both revenue and profits, which the board put down to the completion of major orders for titanium stress joints.

The Europe, Middle East and Africa segment recorded a broadly break-even performance as higher revenue was supported by international activity.

Hunting said its Asia-Pacific segment demonstrated a substantial increase in revenue and a return to profitability, largely due to the successful delivery of the CNOOC order.

The company's balance sheet remained robust, with net debt expected to total approximately $51m to $52m on 30 June.

Looking ahead, Hunting said it expected its second-half performance to be similar to that of the first half.

As a result, management revised its EBITDA guidance for the full year, raising it to the range of $96m to $100m.

Moreover, total cash and bank as at 31 December were now anticipated to be between nil and $25m, as larger projects would be completed in the second half.

The outlook for 2024 was also improving, as sales order books continued to increase.

Hunting said it now foresaw EBITDA for the year ending 31 December 2024 to be in the range of $125m to $135m.

"Hunting has delivered a strong performance in the first half of 2023, as business units across the group benefit from increased client activity," said chief executive officer Jim Johnson.

"Management remains focused on delivering on market guidance, which is supported by robust international market momentum including South America, the Middle East and Asia Pacific.

"The North America drilling market is shifting activity to more oil focused targets, which continues to provide opportunities to the group."

Johnson said Hunting Titan would shortly launch the 'H-4 Perforating System', which would also provide revenue growth to the segment in the second half, in addition to its good progress within international markets.

"Hunting's advanced manufacturing businesses are also seeing good growth in both energy and non-oil and gas markets.

"The group has made good progress in its strategy to position itself in the supply chain for energy transition markets."

Jim Johnson said the company's strategic alliance with Jiuli, announced in June, enabled it to deliver key technologies and products to clients in the geothermal and carbon capture sectors, which management believed would lead to strong sales in the short- to medium-term.

"The outlook for 2023 continues to be strongly positive, with 2024 revenue visibility also improving due to the orders secured during the period."

At 1101 BST, shares in Hunting were up 19.48% at 238.01p.

Reporting by Josh White for Sharecast.com.