Firm warns of 2017 ‘decline’

Amec Foster Wheeler (AFW) has warned of “another year of decline” in oil and gas activity in 2017 after the engineering and project management firm’s losses more than doubled.

Pre-tax losses in 2016 totalled £542million, compared with a deficit of £235million a year earlier.

Group revenue last year was roughly flat at £5.4billion.

AFW, which is currently the subject of a proposed £2.2billion takeover by Aberdeenbased energy service giant Wood Group, confirmed its board had suspended all dividend payments “until sustainable free cash flow is being generated”.

Weakness in oil and gas markets in most regions was partially offset by clean-energy and environment and infrastructure divisions, it said.

“We expect another year of decline in oil and gas”

But the company enjoyed a higher level of oil and gas activity in the North Sea, driven by major offshore hook-ups.

Revenue in the group northern Europe and Commonwealth of Independent States region was in line with the previous year at £1.5billion.

AFW chief executive Jon Lewis said the firm’s trading performance last year was “robust”, considering the difficult market conditions.

He added: “We continue to expect another year of decline in oil and gas activity in 2017 and for solar activity to reduce significantly. It is also expected there will be a better performance from environment and infrastructure and a significant contribution from cost savings.”

AFW, which employs about 35,000 people in more than 55 countries, said a shareholder vote on the Wood Group offer was expected in June.