Wood Group '˜cautious' amid weaker North Sea activity
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The Aberdeen-based group, which earlier this month had its £2.2 billion takeover of rival engineer Amec Foster Wheeler approved by shareholders, said it had seen only a “modest” recovery in some areas of its core oil and gas market.
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Hide Ad“Robust activity in the west including improved performance in offshore greenfield project engineering and commissioning is being more than offset by weaker activity in the east, where we have seen a further reduction in projects and modifications work, particularly in the North Sea,” Wood said in a trading update.
“The impact of the tougher pricing environment in 2016, partially offset by the enduring benefit of structural cost reductions achieved in the last two years, will result in a reduction in first-half margin as expected.”
However, the group told investors that its balance sheet remains strong – although its debt-to-earnings ratio is at the upper end of its preferred range, reflecting last month’s acquisition of US automation and controls firm CEC, which counts car-maker General Motors among its clients.
• READ MORE: Wood Group in $59m swoop for US automation firm CEC
Following shareholder approval on 15 June, Wood expects to complete its purchase of Amec in the fourth quarter, subject to clearance from competition regulators.
Addressing current trading, the group added: “First-half performance is down on 2016 and weaker than anticipated. We are more cautious on the full year outlook but anticipate a stronger second half.”
The update came as it announced a multimillion-dollar contract with Husky Energy to complete detailed engineering for the topsides of White Rose, an offshore wellhead platform planned for eastern Canada.