Wood Group warns of 20% slide in annual profits

Wood Group is forecasting a 20% slide in profits this year. Picture: Contributed

Wood Group is forecasting a 20% slide in profits this year. Picture: Contributed

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Tough market conditions are expected to knock about 20 per cent of Wood Group’s annual profits, the oil and gas services giant warned today.

The Aberdeen-based group, which revealed in February that it had axed more than 8,000 jobs last year as it reported lower full-year earnings, said the landscape remains “challenging” as operators rein in their activities in response to lower crude prices.

The price of Brent crude has risen 22 per cent since the start of the year, but at $45 a barrel is well below the levels of more than $100 seen in January 2014.

In a trading update ahead of its annual meeting, Wood said: “Market conditions remain challenging in 2016 and we have seen further margin pressure in an environment of expected lower activity by operators.

“We anticipate that full-year earnings before interest, tax and amortisation will be around 20 per cent lower than 2015, in line with current analyst consensus expectations.”

The City is forecasting underlying pre-tax profits of $377 million (£261.8m) for the year, down from $469.7m last time.

Last week, Wood said it was planning to cut about 300 onshore roles in the UK amid “continuing cost and efficiency challenges affecting the oil and gas sector”.

It has started consulting with about 1,000 UK onshore staff as it seeks to “strategically position the company to remain competitive both now and in the future”.

The group, led by chief executive Robin Watson, added today: “Our continued focus on reducing costs, improving efficiency and broadening our service offering through organic initiatives and strategic acquisitions, positions us as a strong and balanced business in both the current environment and for when market conditions recover.”

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Wood is next due to update the market on first-half trading at the end of next month.

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