Wood Group reports 28% fall in profits

Wood Group workerImage source, Wood Group

Oil services provider Wood Group has reported a sharp drop in profits, revenue and its staff levels in 2016.

The Aberdeen-based oilfield services firm reported revenue down by 16% to $4.9bn (£3.96bn).

Profit before tax and exceptional items fell from $338m to $233m (£271m to £187m).

The company, which is based out of both Aberdeen and Houston, Texas, has cut its payroll across the 40 countries by 36% over the past two years.

After cutting $114m (£91m) from its costs in 2015, it cut a further $95m (£76m) last year.

The figures reflect a second very tough year for the oil and gas sector, in which Wood Group is a major player in providing a wide range of oilfield engineering services.

'Modest increase'

Under chief executive Robin Watson, it has been re-organised and management streamlined into a more unified international structure. That process accounts for some of the exceptional costs.

The major part of the exceptional costs, $89m (£71m), was for the reduced book value of EthosEnergy, a company specialising in rotating equipment, set up as a joint venture by Wood Group and Siemens in 2014.

Wood Group is now considering whether to sell its share.

In 2015, Wood Group saw revenue fall 23%, while earnings before interest, tax and depreciation were down 14%.

Chairman Ian Marchant said: "Indications for 2017 suggest the potential for some modest increase in spending from 2016 levels, reflecting a recovery in North American onshore spending, largely offset by further reductions elsewhere for a third successive year."

Robin Watson said Wood Group is cautious about the near term, and that pricing is going to continue to have downward pressure.

He added: "Overall, the oil & gas market continues to present challenges in 2017. We anticipate modest recovery only in markets such as US onshore and greenfield offshore projects."

The Wood Group share price fell by 8% following the full-year results announcement.

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