Hunting PLC (LON:HTG) shares slipped in early deals on Wednesday after increased competition and a freezing Canadian winter dented its margins in the first quarter.
In a trading update ahead of its AGM on Wednesday, the FTSE 250 oil and gas services provider said the increased competition, caused by the industry working through “excess inventories built up in late 2018”, had affected margins of its Hunting Titan division, which primarily focuses on pipeline equipment manufacturing.
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As a result, the company said it had had to implement some price reductions on its products and reduce its inventory, although stressed that this was not expected to continue in the rest of the year and that market share had been maintained.
“Extremely cold weather conditions” over January and February had also affected volumes and margins in Canada due to a drop in activity levels.
In Europe, activity in the North Sea remained lower in comparison to historic levels, although losses had been contained by improved sales in some of its product lines.
Meanwhile, US results for the quarter were “ahead of expectations”, thanks to improving demand for onshore operations.
There was also positive news from the Asia Pacific, with revenues coming in ahead of expectations, while the Middle East was break-even.
Overall, the company reported underlying earnings (EBITDA) of US$35mln in the quarter, in line with its internal targets, while revenues and profits had continued at levels seen in the fourth quarter of 2018.
Looking ahead, Hunting said the rest of the year “remains positive” given improving oil prices, which have risen over 40% since the start of the year, and a predicted uptick in sentiment for US shale operations.
“With cost saving measures established in earlier years within our international operating segments, together with some modest market improvements, segmental results are improving and are reporting reduced losses in comparison to prior periods, particularly in our European operations.”
Shares were down 2.2% at 635.5p.