Hunting full-year profit misses estimates, guidance belies caution

28th Feb 2019 11:44

(Sharecast News) - Hunting posted weaker-than-expected full-year profits on the back of the sharp drop in crude oil prices seen at the end of 2018 and the company's guidance appeared to belie caution on the part of its management team.For the twelve-month stretch ending on 31 December, the manufacturer of equipment for the upstream Oil&Gas sector saw underlying operating profits more than double, with earnings before interest, taxes, depreciation and amortisation rising from $56.0m one year ago to $142.3m (consensus: $146.0m).That was on the back of a 25.7% increase in revenues to $911.4m.Commenting on the outlook, group chief, Jim Johnson said: Given the ongoing commodity price and geopolitical volatility, the Board remains focused on the agility and flexibility of the business to respond to market conditions."Initiatives to further improve profitability and margins, and reduce losses, including in-sourcing of production, facility rationalisation and inter-segment manufacturing, will also continue in the year ahead."Nevertheless, Hunting did say that its improved performance had extended into 2019.Completion activity in the US onshore sector over the course of 2018 was described as "strong", leading to a record performance at its non-fracking unit, known as Titan.Indeed, higher demand was recorded across all its product segments.And yet the focus of the $30.1m spent by the firm on capital expenditures was on cost reduction and improving efficiency, although Hunting also said that it remained open to 'bolt-on' acquisitions.More efficient manufacturing processes for its products would also lead to higher margins, the company said, although that was "conditional on activity levels improving".In parallel, the group's efforts at rationalising its operations continued throughout the latest reporting period, with a manufacturing facility in Kenya and three distribution centres in the States having been closed.New products and technologies set for launch in 2019 would broaden its market reach.As of 1122 GMT, shares in Hunting were down by 1.08% to 547p, but off their intraday low of 541.50, although they remained far from their 52-week highs at 934.5p reached in May.