Shares rise despite huge tumble in Wood profits

INDUSTRY: Energy services major is a ‘strong and balanced business’

Cost-cutting measures which were made as the oil price plunged saved energy services giant Wood Group more than $148 million last year.

Chief executive Robin Watson said the cutbacks – which reduced the firm’s workforce by 8,000 on an underlying basis in just 12 months – meant northeast headquartered Wood remained a “strong and balanced business” despite the industry downturn.

New figures released yesterday show that group-wide revenues dropped by almost a quarter to $5.85 billion in the year to December 31.

Earnings before income, taxation and amortisation were 14.5% lower at $469.7m, while pre-tax profits after exceptional items from continuing operations were 70.8% down on 2014 at $138.6m.

Despite the fall in profits, investors were cheered by Wood’s performance and shares pushed ahead by almost 5% .

In his statement to the accounts, Mr Watson said Wood continued to invest strongly in its business with total capital expenditure of $83 min 2015 on plant and infrastructure, design software and enterprise resource planning applications.

However, he also signalled that further cuts were on the radar.

Last week, subsidiary business Wood Group PSN announced an average 9% cut in UK contractor pay.

“The challenging market conditions in the second half of 2015 have continued in the first quarter of 2016,” Mr Watson said.

“Further spending reductions by customers will require continued focus on the controllable elements of our business.

“Our continued actions to reduce costs, improve efficiency and broaden our service offering through organic initiatives and strategic acquisitions position us as a strong and balanced business in the current environment and when market conditions recover.”

Chairman Ian Marchant said the group had performed in line with expectations last year.

He said the company had benefitted from its “asset light model” and the delivery of “significant” cost savings.

Shares closed up 29p at 612.5p.

Wood Group PSN provides operations and maintenance services to oil rigs including Chevron North Sea’s Captain platform. Group-wide revenues dropped by almost a quarter in the year to December 31.