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Cost control helps Aberdeen group

Wood profits hit amid 20% spending slump

Robin WatsonCost management and one-off benefits helped Wood Group through a challenging year in which spending by exploration and production companies fell by 20%.

The Aberdeen company, revealing a 28.4% fall in underlying profits for the year to $244m (£180m), said early indications for 2017 “suggest the potential for some modest increase in spending from 2016 levels” on the back of a recovery in North American onshore spending.

But this will be largely offset by further reductions elsewhere for a third successive year.

Given the spending outlook for 2017 and the inherent lag of the impact on service company activity, Wood said it is “cautious on the near term outlook for the group. However, we remain positive on the longer term recovery.”

Robin Watson, chief executive said: “Despite challenging conditions in our core oil & gas market in 2016 the Group delivered financial performance in line with expectations. Results benefited from the robust management of utilisation and costs and one off benefits.

“We enter 2017 as One Wood Group, repositioned to enhance customer delivery and we are encouraged by their support for our services, albeit in a competitive pricing environment. The oil & gas market continues to present challenges and we remain cautious on the near term outlook”.

Chairman Ian Marchant said: “The impact of structural cost reductions and the organisational change will help ensure that Wood Group emerges from this prolonged downturn as a stronger, better business in an oil & gas market that has re-calibrated to a lower for longer commodity price environment. 

The board has recommended a final dividend of 22.5 cents per share, which makes a total distribution for the year of 33.3 cents, an increase of 10% in line with previously stated intentions.

The dividend cover ratio was 1.9 times (2015: 2.8 times). Following successive 10% annual increases in the dividend, the company intends to pursue a progressive dividend policy.

Financial Summary

2016

$m

2015

$m

%

Change

Total Revenue1

4,934

5,852

(15.7)%

Total EBITA1

363

470

(22.8)%

EBITA Margin

7.4%

8.0%

(0.6)%

Revenue from continuing operations on an equity accounting basis

4,121

5,001

(17.6)%

Operating Profit before exceptional items

244

341

(28.4)%

Profit for the year

34.4

90.1

(61.8)%

Basic EPS

7.5c

21.4c

(65.0%)

Adjusted diluted EPS2

64.1c

84.0c

(23.7%)

Total Dividend

33.3c

30.3c

10.0%

 

 

 

 

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