Amec Foster Wheeler pre-tax losses doubled in 2016 as oil firms cut contracts due to low oil prices

Courtney Goldsmith
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Amec Foster Wheeler is in talks with Wood Group about a potential tie-up (Source: Getty)

Oilfield services firm Amec Foster Wheeler's shares edged down after it said full-year losses more than doubled as oil companies delayed or cancelled contracts due to low oil prices.

The figures

For 2016, Amec noted a loss before tax of £542m compared with a pre-tax loss of £235m the previous year.

The group said revenue was in line with trading expectations at £5.44bn for 2016.

Amec announced a dividend of 7.4p per share, down from 29p per share the previous year.

Shares in the FTSE 250 firm fell nearly one per cent in morning trading.

Why it's interesting

Fellow British oil services firm John Wood Group agreed to a £5bn merger with Amec last month, and shareholders are set to vote on the tie-up in June.

Following the downturn in oil prices, producers worked to cut costs by delaying projects and contracts, which meant lost profits at oil services companies like Amec.

Output has been growing in the US, however, and Amec has been looking to capitalise on the rise in demand for US offshore and shale oil rigs.

Read more: Benchmark crude prices are falling

What Amec Foster Wheeler said

Chief executive John Lewis said the business will continue to make "significant" progress in 2017 despite further declines in oil and gas activity.

We continue to expect another year of decline in oil and gas activity in 2017 and for solar activity to reduce significantly from the record levels seen in 2016. It is also expected that there will be a better performance from environment and infrastructure and a further significant contribution from standalone overhead cost savings.

"This year, we will continue to leverage the outstanding technical expertise of our people to best serve our customers and deliver projects safely across all the markets in which we operate. This and the improvements we have made to the business will ensure we continue to make significant progress in 2017".

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