Wood Group swings to loss in 2017 but forecasts brighter North Sea horizons

● Bottom line dragged by costs of Amec Foster Wheeler while topline up by 25%

Aberdeen-based energy services heavyweight Wood Group expects to be busier in the North Sea in 2018 than in 2017 after swinging to an overall loss due in part to costs related to its Amec Foster Wheeler (AFW) acquisition.

The group saw revenue jump by a quarter from 2016 to $6.17 billion (£4.4bn), but it reported a pre-tax loss of $30 million, compared to a profit of $34.4m 12 months previously. The total dividend showed a 3 per cent year-on-year jump to reach 34.3 cents.

The company said the loss for the period was stated after exceptional costs of $165m, including $67m regarding the £2.2bn AFW deal, which completed in October.

Chief executive Robin Watson told The Scotsman he was very pleased with the platform created by acquir- ing AFW, adding that the 2017 results are ahead of the group’s guidance, and in line with pro forma. Going into growth this year is “something that we find very encouraging”.

He added: “Having come through what we see as the worst downturn in oil and gas for probably four decades… we feel we’re now through the worst of that and coming out the other side.”

Watson expects “modest” growth this year from a low base in the North Sea, which provides about 5 per cent of the group’s global revenues and where it employs about 4,000 people directly in what is a “challenging” environment. “We anticipate we’ll be busier in the North Sea in ‘18 than we were in ‘17”.

The business has also been unveiling a string of new contracts, with Watson highlighting the agreement to develop the world’s largest crude oil-to-chemicals project in Saudi Arabia on behalf of Saudi Aramco and Sabic.

That was a “tremendous win” for the enlarged group, he said. “I think it epitomises having that broader end market and even the broader oil and gas exposure. It’s a good example of an early revenue synergy.”

The integration of AFW is progressing “at pace”, with Wood Group confident of delivering synergies of at least $170m by the end of the third year following completion and is currently ahead of schedule.

During the year the group also secured its first downstream win in the UK, supporting the Lindsey oil refinery for Total for five years.

Looking ahead, Watson is “really encouraged” by the group’s sales pipeline. “It’s a healthy backlog that we see going into ‘18 in terms of secured activity, which gives us confidence at this stage to be talking about growth in terms of our earnings.”