High profile order shipments were a significant influence on H1’25 performance against the prior year – positive for OCTG, adverse for Subsea – driving overall profitability ahead y-o-y. Portfolio actions, including two acquisitions in higher margin, higher growth subsectors, will bring further benefit to future earnings. Hunting’s net cash position retains balance sheet optionality for its capital allocation policy which balances growth aspirations with shareholder returns.
At group level, Hunting delivered revenue and EBITDA (100% owned operations) growth of 7% and 13% respectively in H1’25. A small gross margin increase (+40bp to 27.8%) was supplemented by good opex control – particularly in admin expenses, generating a 70bp uplift in EBIT margin from wholly owned operations.
Strong working capital inflow performance boosted free cash flow significantly compared to the prior year which was applied to acquisitions, dividends and treasury share purchases leaving period end net cash at c. U$75m (down U$25m over H1). The interim dividend was the first to be declared under the updated capital allocation policy and, accordingly, was 13% above H1’24.
Company outlook commentary points to “choppy markets” indicating some scope for variance against unchanged FY25 EBITDA guidance of U$135m-145m. Across most areas, however, order books provide reasonable coverage to the year end and we leave our projected EBITDA at U$130m, with subsequent years profitability unchanged.
We increase our fair value to 400p per share – this is derived from EV/EBITDA benchmarking plus DCF analysis. A prospective yield on the dividend of 3.0% and expectation of it growing 13% annually, plus a new share buyback programme, should all offer support for the shares in our view.
