Lamprell is to shut two of its fabrication facilities in the UAE as part of a cost saving strategy.
The company plans to close its Sharjah plant later this year once it completes work on jackets for the Moray East wind farm off Scotland and Jebel Ali has already been mothballed, leaving Hamriyah its main site.
The closures will reduce overheads for 2020 by US$23m, 90% of which is related to cash overheads, and are associated with “significant headcount and allowance reductions”, most of which has been implemented.
Restructuring will result in a non-cash impairment charge of intangible and immovable assets in Sharjah of approximately US$13.2m in the 2019 financial statements. In 2020 there will be an estimated one-off charge of US$7.5m, which relates to the demolition costs in Sharjah and staff termination costs.
Lamprell is also planning for low levels of critical-only capital expenditure at its facilities, with a total value below US$10m in 2020.
“The Hamriyah yard is our largest facility and continues to operate, offering various expansion opportunities should the Group require additional space,” said Lamprell.
“These actions allow for the Group to gradually grow fabrication volumes whilst significantly improving efficiency and reducing its cost base.”
Fabrication work is meanwhile continuing despite the COVID-19 pandemic, the company said.
It is too early to make a comprehensive and final impact of the virus on the business, however, it is “inevitable” that there will be a hit on productivity and increases costs.
Senior management and professional staff are to take a 25% pay cut for six months, some staff are on reduced working hours and unpaid leave while there have also be redundancies.
The measures will save US$10m in 2020. The company has withdrawn is 2020 guidance.
Chief executive Christopher McDonald said “We are operating in a period of unprecedented global uncertainty, focusing on the safety and sustainability of our operations and the health and wellbeing of our employees.”