Hunting (LSE: HTG) trims EBITDA guidance after Kuwait tender delay

Hunting PLC (LSE: HTG) has cut its 2026 EBITDA guidance to $138 million-$141 million after a Kuwait Oil Company tender delay removed approximately $10 million of expected earnings from the year, prompting a sharp selloff even as the precision-engineering group reported stronger statutory profit and raised its interim dividend. The revised range compares with previous guidance of $145 million-$155 million, lowering the midpoint from $150 million to $139.5 million, or by about 7%.

The downgrade overshadowed a mixed first half. Revenue declined 6% to $497 million and EBITDA fell 12% to $62.1 million, while EBITDA margin narrowed to 12% from 13%. However, statutory operating profit increased to $39.7 million from $36.2 million and profit before tax rose to $34.2 million from $30.6 million because the prior period contained substantially larger adjusting items.

Why did Hunting cut guidance after maintaining it only weeks earlier?

Hunting had maintained full-year EBITDA guidance of $145 million-$155 million in its July trading update, with management expecting earnings to be weighted approximately 40:60 between the first and second halves. The change came after further delays in the Kuwait Oil Company tender process, which is now being rerun and is not expected to contribute new contract revenue until 2027.

Management estimates the delay will reduce 2026 EBITDA by approximately $10 million. The new $138 million-$141 million range implies that most of the operational business remains broadly consistent with prior assumptions, but it removes much of the headroom that investors had expected from second-half recovery.

The tender also presents a possible 2027 issue. Hunting said the timing and outcome could have a maximum adverse impact of around $10 million on current 2027 EBITDA consensus, which stood at approximately $165 million before the results announcement.

Where is Hunting still seeing growth despite weaker first-half revenue?

Subsea Technologies and Perforating Systems were the standout operations. Hunting secured $63.5 million of orders for titanium stress joints linked to ExxonMobil’s Guyana developments, with delivery expected through 2027, while international demand for unconventional well-completion products supported strong Perforating Systems performance.

Those gains were offset by weaker activity in Oil Country Tubular Goods, Advanced Manufacturing and other manufacturing operations, partly because of project phasing. The result is a portfolio increasingly dependent on subsea, international unconventional drilling and higher-value engineered products to compensate for slower traditional activity.

Hunting is also restructuring its European, Middle East and Africa footprint. The company is targeting approximately $15 million of annualised group cost savings by the end of 2027, with actions already taken in the region expected to contribute around $11 million of annualised savings.

Why is cash flow a bigger concern than the statutory profit increase?

The balance-sheet movement was one of the weaker elements of the half-year report. Hunting recorded free cash outflow of $27.8 million compared with positive $66.2 million a year earlier, while net cash of $44.7 million at the previous comparable point moved to net debt of $51.4 million.

Working capital was the principal driver, with the company building inventory and other operating assets ahead of anticipated stronger second-half activity. Hunting expects those investments to unwind and still forecasts year-end total cash and bank balances of approximately $50 million-$60 million.

That assumption now carries greater importance because investors need evidence that the first-half cash absorption was genuinely timing-related. If second-half orders convert into deliveries and receivables are collected as expected, cash should improve substantially; if projects are delayed further, the balance-sheet recovery could take longer.

Why did Hunting raise the dividend while cutting EBITDA guidance?

The board declared an interim dividend of 7 cents per share, up from 6.2 cents a year earlier, an increase of approximately 13%. Hunting is also continuing a $40 million share-buyback programme that is expected to run through March 2028.

The capital returns suggest management views the earnings setback as primarily timing-related rather than evidence of structural deterioration. Nevertheless, dividends and buybacks consume cash at the same time as working capital has expanded, making successful second-half cash conversion central to sustaining that stance.

What does the 13% share-price fall say about investor expectations?

Hunting shares closed at 412 pence on August 21, down 12.99% from 473.5 pence, after falling as low as 380 pence intraday. Trading volume exceeded one million shares, substantially above most sessions during the preceding month.

The size of the decline indicates that investors were not treating the Kuwait delay as a trivial timing adjustment. Before the results, the stock had benefited from expectations of a strongly weighted second half and maintained $145 million-$155 million EBITDA guidance. Reducing that target while reporting weaker cash flow forced the market to reprice both the 2026 earnings base and some of the assumed 2027 growth.

Hunting still has meaningful positives, including subsea orders, stronger Perforating Systems activity, cost reductions and a larger dividend. The burden of proof has nevertheless shifted toward execution: the company now needs second-half delivery and working-capital normalisation to demonstrate that the Kuwait setback has delayed earnings rather than weakened the broader growth thesis.