Tough trading conditions and Amec costs drag Wood Group's profit down 87pc

 
Courtney Goldsmith
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Picture taken 19 September 1984 in the North Sea o
The oilfield services firm has struggled amid the low oil price environment (Source: Getty)

Oilfield services firm John Wood Group's profit dropped in the first half of the year due to exceptional charges while work in the North Sea remained "particularly challenging".

The figures

The company's profit tanked 86.7 per cent to $5.5m for the six months to the end of June, dragged down by exceptional costs of $47.6m, including a $25.2m charge related to the acquisition of Amec Foster Wheeler.

Wood Group's total revenue was down 11 per cent to $2.28bn.

Shares in the firm edged down 0.46 per cent to 571p in morning trading.

Why it's interesting

Wood Group, which operates in more than 40 countries, has struggled amid a low oil price environment as producers slash their budgets.

In June, the company had warned that performance in the first half was "weaker than expected" due to a tougher pricing environment, but it has not changed its full-year outlook in hopes of a stronger second half.

"​The themes identified in December 2016 have played out largely as expected in the first half and although the market continues to present challenges, we do anticipate a stronger second half performance in 2017," Wood Group said.

The firm is buying smaller rival Amec for £2.2bn, and the deal is expected to complete in the fourth quarter.

The Competition and Markets Authority (CMA) had raised concerns over the planned takeover, leading the companies to offer to sell off Amec's North Sea operations.

What Wood Group said

Chief executive Robin Watson said:

First half performance was down on 2016 reflecting the different market conditions across our business.

In June shareholders overwhelmingly approved our offer for Amec Foster Wheeler which will accelerate our strategy to create a global leader in project, engineering and technical services across a broad range of industrial sectors, the largest of which will be oil and gas. We remain on track to complete the transaction in the fourth quarter.

Read more: Competition watchdog weighs up Amec asset sale for Wood Group takeover

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