Oil and gas services giant Wood Group is bracing itself for another tough year in the North Sea after reporting a slide in annual profits.
The Aberdeen-based firm also revealed that it had cut 6,500 jobs as its earnings fell by almost a quarter amid “challenging” conditions across the energy sector, and chief executive Robin Watson said there was little hope of a dramatic upturn in business during the year ahead.
He said: “Activity levels in the North Sea operations, maintenance and modifications work are not anticipated to improve significantly in 2017.”
His comments came after Wood Group said that underlying earnings before interest and tax dropped to $363 million (£292m) for the year to the end of December, down from $470m in 2015 but broadly in line with City forecasts.
Total revenues slid by 15.7 per cent to $4.9 billion, although shareholders are in line for a 10 per cent hike in their total dividend payout to 33.3c a share.
Despite the drop in earnings, Watson said the group’s financial performance was “in line with expectations”.
He added: “We enter 2017 as ‘One Wood Group’, repositioned to enhance customer delivery and we are encouraged by their support for our services, albeit in a competitive pricing environment.
“The oil and gas market continues to present challenges and we remain cautious on the near-term outlook.”
Watson said the “One Wood Group” reorganisation had taken 18 months of “bloody hard work”, shaking up the structure of the business to move away from being focused on individual brands such as Kenny and Mustang, which have now been ditched, in a bid to concentrate on customer service.
The group now has two key divisions – specialist technical services and asset life cycle solutions, with the latter divided into eastern and western regions. In the eastern business, which includes the North Sea, employee numbers fell by almost a fifth to 15,300.
Having cut 6,500 jobs overall last year, Wood now has just under 29,000 employees, and Watson pointed out that the workforce has shrunk by 36 per cent over the past two years, in line with the decline in its revenues.
But he told The Scotsman: “In the UK, we have now have a broader footprint, with an industrial services business that has a marine aspect to it, and that’s actually grown.”
Wood also has a robotics arm that counts Jaguar Land Rover among its clients.