Wood headcount falls 8,000 as profits slump

Aberdeen-based oil and gas services company Wood Group said on Tuesday it suffered a sharp decline in revenue and profit in 2015 as low oil prices and slowing activity in the sector took their toll.

Total revenue at the global energy services firm fell 23.2% to $5.8 billion, and Wood said its underlying headcount worldwide was reduced in 2015 by more than 8,000 people — about 20%.

Profit from continuing operations before tax and exceptional items “on an equity accounting basis” fell 22.8% to $320.2 million in the year to December 31.

“Our continued actions to reduce costs, improve efficiency and broaden our service offering through organic initiatives and strategic acquisitions, position us as a strong and balanced business in both the current environment and for when market conditions recover,” said Wood Group chief executive Robin Watson.

The company raised its total dividend 10.2% to 30.3c per share and Wood said it intends to increase the dividend for 2016 by a double digit percentage.

“With a robust balance sheet and strong cash generation the company remains well placed to weather an extended downturn,” wrote Mirabaud analyst David Thomas.

Wood Group’s share price was up more than 7% in afternoon trading.

After exceptional items, profit from continuing operations before tax  “on an equity accounting basis” fell 70.8% to $138.6 million.

Earnings before interest, taxes and amortization (EBITA) fell 14.5% to $470 million.

Adjusted, diluted earnings per share fell 15.7% to 84c.

“Conditions in oil & gas markets became increasingly challenging in 2015,” said Wood Group chairman Ian Marchant.

“During the year, oil prices fell by around a further 30% and E&P capital expenditure was down approximately 20%.

“The expectation of a lower-for-longer commodity price environment has prompted many global E&P customers to reassess capex and opex spending plans.

“Industry commentators are anticipating further spending reductions in 2016, which would represent the first consecutive annual declines in spending in more than 20 years.

“In other markets we have seen more resilient demand for our services.”

Wood Group said that in its engineering operations, the impact of upstream and subsea project deferrals and cancellations was partly offset by growth in its downstream work and a robust performance in its onshore pipelines work.

It said that in its PSN Production Services division, the North Sea was affected by reductions in non-essential maintenance work and operator efficiency initiatives and its US onshore business was affected by significant pressure on volumes and pricing following a strong 2014.