Wood Group sticks to forecast for 20% profit slide

Energy services giant Wood Group today said it was sticking to its guidance for a 20 per cent drop in annual profits as it battles 'very challenging' conditions in the North Sea.

Wood Group is headed by chief executive Robin Watson. Picture: Contributed
Wood Group is headed by chief executive Robin Watson. Picture: Contributed

The Aberdeen-based group, led by chief executive Robin Watson, warned over earnings last month as operators rein in their activities in response to lower crude prices.

In today’s trading update, Wood said: “In the North Sea, the operating environment remains very challenging for both volume and pricing but we are maintaining our leading position in brownfield operations, maintenance and modifications, having renewed contracts with Chevron, Enquest, Nexen, Shell, Talisman, Taqa and Total.”

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It added: “Our recent acquisition of some of the assets of Enterprise Engineering Services Ltd (EESL) will assist us in working towards further in-house and customer efficiencies as we expand our capabilities. Our industrial services business continues to perform well in the defence and industrial markets as well as the oil and gas market.”

Earlier this month, Wood said the deal for the fabrication business of EESL, which fell into administration in May, would expand its range of capabilities as it seeks to drive down costs in the North Sea. About 100 jobs were lost at EESL, with ten remaining employees kept on at its Craigshaw Road fabrication facility in Aberdeen.

On the other side of the Atlantic, Wood said that “relatively robust activity” away from the onshore US market – combined with the acquisitions of Infinity and Kelchner towards the end of last year – will help offset the impact of pricing and volume pressure on its PSN division.

“Although we are not seeing any immediate increase in our operating and maintenance activity, we continue to strive for efficiencies, through reorganisation and centralisation and are confident that we are well positioned for when the market recovers,” the group said.

Wood Group is due to announce its first-half results on 16 August.