Wood Group reveals 8,000 job losses as profits drop

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Oil and gas services giant Wood Group today insisted it was a “strong and balanced business” despite reporting lower full-year earnings.

The Aberdeen-based group also revealed that its underlying headcount had been slashed by more than 8,000 – or about a fifth – since the end of 2014, with about 2,000 jobs lost in the UK alone.

Wood Group chief executive Robin Watson said the firm was 'strong and balanced'

Wood Group chief executive Robin Watson said the firm was 'strong and balanced'

Amid plunging crude prices, Wood Group posted underlying earnings of $469.7 million (£332.9m) for 2105, down from $549.6m the previous year.

Revenues tumbled 23.2 per cent year-on-year to $5.9 billion, but Wood Group proposed a 10 per cent increase in its total dividend for the year ending 31 December to 30.3 cents a share and said it plans a further double-digit increase for the coming year.

Today’s figures came as a report from trade body Oil & Gas UK warned the North Sea industry was “at the edge of a chasm” after a collapse in vital investment and exploration for new fields. New projects have all but ground to a halt, raising fears for the sector’s long-term future, with less than £1bn being spent this year – when this figure usually stands closer to £8bn annually.

READ MORE: North Sea oil industry future at risk as new projects stall

Wood Group chief executive Robin Watson said: “Against a backdrop of significantly reduced customer activity, the group delivered earnings before interest, tax and amortisation of $470m, in line with expectations and 14.5 per cent lower than 2014.

“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 both the current environment and for when market conditions recover.”

READ MORE: Wood Group PSN slashes contractor rates by 9%

Today’s results revealed that pre-tax profits from continuing operations slumped 70.8 per cent to $138.6m once one-off items were accounted for.

Wood Group’s global headcount now stands at about 36,000, of whom some 10,000 are employed in the UK.

Watson told The Scotsman: “It’s been tough, but the industry does go through these cycles, particularly in upstream oil and gas.”

As part of efforts to “rebalance” its business, the group last week struck a five-year agreement to provide services to Valero Energy’s Pembroke refinery in south-west Wales – its first deal in the UK petrochemicals sector.

READ MORE: Wood Group makes first move into UK refining market

“We still see oil and gas as our core market and we’re positive about the medium- to longer-term role it will play in the energy mix,” Watson said.

He added: “There is no doubt that the North Sea, as a mature basin at $30 oil is more stressed than some other basins. But onshore shale in the US has been similarly impacted, and there’s been more headcount reduction there than in the North Sea as activity has dried up.”