The Courier & Advertiser (Fife Edition)
Wood Group profits fall ahead of Amec deal
ENERGY: Services group figures come on same day as update from oil explorer Cairn
Energy services giant Wood Group has taken a major profits hit after tough conditions in the North Sea weighed on its performance.
The group, which is in the process of acquiring Amec Foster Wheeler, reported a 77% fall in pre-tax profit to £10.5 million in the six months to June 30, while revenue fell 10% to £1.4 billion.
“First-half performance was down on 2016, reflecting the different market conditions across our business,” chief executive Robin Watson said.
“Robust performance in ALCS (Asset Life Cycle Solutions) West and growth in STS was offset by a weaker performance in ALCS East, where the North Sea market is particularly challenging.”
Wood Group also booked £37m of exceptional costs, more than half of which was linked to its proposed £2.2 billion takeover of Amec.
However, the north-east firm’s fullyear outlook is unchanged, and it anticipates a stronger second-half performance.
It sanctioned a 3% increase in the firsthalf dividend.
Earlier this month the Amec deal received a boost after the Competition and Markets Authority said proposals put forward by the firms could help allay anti-trust concerns, meaning it will avoid a full-blown probe.
Mr Watson added: “In June shareholders overwhelmingly approved our offer for Amec Foster Wheeler which will accelerate our strategy to create a global leader in project, engineering and technical services across a broad range of industrial sectors, the largest of which will be oil and gas.
“We remain on track to complete the transaction in the fourth quarter.”
The update came on the same day as Scottish oil explorer Cairn Energy also released its half-year figures.
The Edinburgh-based group produced a profit of £245m for the period to June 30, although that figure included a net gain of £314.2m on the derecognition of a financial asset following merger of Cairn India and Vedanta.
Group revenues in the period totalled £8.5m, although operational and administrative expenses relating to pre, award, production and exploration costs meant the group booked a £21m operational loss, an improved situation compared with a year ago.
CEO Simon Thomson said Cairn had made strong progress in the half year.
He said: “In the North Sea, Kraken has commenced production and Catcher is scheduled for first oil later this year.
“In Senegal, planning work has commenced on the phased development of the world-class SNE field.
“Cairn has also added to its exploration portfolio with exciting new opportunities in Norway, Ireland and Mexico creating additional drilling prospects in the near term.
“With a strong balance sheet and imminent cashflows, Cairn remains well funded to create and capture value for our shareholders.” the