Wood Group's shares have tumbled after it reported a 62 per cent fall in its 2016 profit as weak oil prices causing producers to cut spending.
Shares in the FTSE 250-listed oilfield services company plummeted as much as 11 per cent in morning trading when it revealed its profit for the year ended 31 December 2016 dropped 61.8 per cent to $34.4m (£27.7m) from $90.1m the previous year.
Revenue fell 15.7 per cent to $4.93bn while earnings before interest, tax, depreciation and amortisation fell 22.8 per cent to $363m, in line with previous guidance.
Adjusted earnings per share slumped to 64.1 cents a share, down 23.7 per cent.
Why it's interesting
Wood Group, which operates in more than 40 countries, said oil and gas markets were "very challenging" in 2016 due to low oil prices slashing the budgets of producers, sending customer spending spiralling down 20 per cent. These challenges are seen continuing in the year ahead with "modest increases".
The energy services firm expects some recovery in North America where US onshore spending where projects are on the rise.
"Given the spending outlook for 2017 and the inherent lag of the impact on service company activity, we are cautious on the near term outlook for the group. However, we remain positive on the longer term recovery," Wood Group chair Ian Marchant said.
What Wood Group said
Chief executive Robin Watson said:
"Despite challenging conditions in our core oil and 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 and gas market continues to present challenges and we remain cautious on the near term outlook”