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8,000 jobs lost as Wood Group takes oil hit

Robin WatsonWood Group saw its revenue and profits slump following the sharp fall in investment in the oil sector which has seen it lay off 8,000 staff over the year.

The oil services company said conditions in oil & gas markets became “increasingly challenging” in 2015. During the year, oil prices fell by around a further 30% and E&P capital expenditure was down approximately 20%.

The expectation of a lower-for-longer commodity price environment has prompted many global E&P customers to reassess capex and opex spending plans, it said, adding that industry commentators are anticipating further spending reductions in 2016, which would represent the first consecutive annual declines in spending in more than 20 years.

In other markets it has seen more resilient demand for its services.

Earnings before interest tax and amorisation (ebita) for the year to the end of December fell 14.5% from £549.6 million to £469.7m on a 23.2% decline in revenue from £7.6 billion to £5.9bn.

Profit from continuing operations before tax after exceptional items (after tax on JV profits) on an equity accounting basis slumped 22.8% from £414.5m to £320.2m.

The board has recommended a final dividend of 20.5 cents per share, which makes a total distribution for the year of 30.3 cents, an increase of 10% in line with previously stated intentions.

The dividend cover ratio was 2.8 times (2015: 3.6 times). There is no change to our dividend approach, and our intention is to increase the dividend per share for 2016 by a double digit percentage.

Robin Watson (pictured), chief executive, said: “Against a backdrop of significantly reduced customer activity, the group delivered EBITA of $470m in line with expectations and 14.5% 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.”

 

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