Amec Foster Wheeler rises as record North Sea revenue helps it beat estimates

 
Jessica Morris
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(FILES) File Photo taken in the North Se
Amec posted record UK North Sea revenue (Source: Getty)

Amec Foster Wheeler closed up 11.71 per cent to 521p per share today, after the embattled oil and gas engineer's first half profit beat expectations.

The figures

Amec's revenue from continuing operations swelled seven per cent to £2.8bn in the six months ended 30 June, ahead of a company-supplied forecast for £2.5bn.

The London-listed firm's trading profit stood at £177m during this period, again beating the company's estimates for £158m.

It said that record solar and UK North Sea revenue helped offset a weaker performance in its Americas division, which suffered as oil and gas customers delayed or cancelled contracts.

But Amec fell to a pre-tax loss £446m due to asset write-offs and impairments charges, down from a profit of £73m this time last year.

It said that expectations for full-year trading were unchanged.

Why it's interesting

These were the maiden set of results under chief executive Jonathon Lewis who took the reins 1 June.

Lewis said today that Amec is part-way through a strategic review into its organisational structure and cost base — the results of which are due out in the Autumn.

Amec has promised to make cost cuts, as well as asset sales to shore up its balance sheet, in response to the commodities rout which has hit its oil and gas customers.

Last year, the company's shares plunged 20 per cent after it cut its dividend and warned trading would remain tough in 2016.

What Amec said

Amec warned that the Brexit vote could discourage new investment in the oil and gas industry.

"The UK's decision to leave the European Union has brought about a period of economic uncertainty that is likely to continue until after separation takes place. This uncertainty may dampen investment in an environment of negative market sentiment," it said.

"There is also the possibility of a second Scottish independence referendum which would create further uncertainty, particularly in the North Sea oil and gas sector. The decision of the UK to leave the EU may also have a knock-on effect elsewhere in Europe as member states consider their own futures in the union."

What the analysts said

"The adjusted first half results beat expectations [but] reported profits were hit by impairments and write-offs. The outlook remains challenging in many business areas and costs and margins will remain under pressure," Andrew Whittock, Liberium, said.

"We do not anticipate significant changes to consensus Amec Foster Wheeler forecasts and expect to retain our 'hold' recommendation."

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