Wood profit falls 63% in ‘challenging’ first half

Aberdeen-based oil and gas services giant Wood Group said revenue fell 16.6% to £2.56 billion and profit fell 63% to £44.6 million in the six months to June 30 “as challenging conditions prevailed in the oil and gas sector.”

Wood cited “continued pressure on volumes, scope and pricing in the North Sea and US onshore in the Americas” for the results but said it sees “early indications of modest recovery in some areas” looking ahead.

In the North Sea, Wood said some employees had engaged in industrial action on its Shell contract and that it is “focused on resolving the dispute consistent with the overarching requirement to have a reduced sustainable cost base moving forward.”

Wood Group chief executive Robin Watson said: “Performance in the first half of 2016 reflects the balance of a challenging oil and gas market, our continued focus on utilisation and cost management and the benefits of our flexible, asset light model.

“Our overall outlook for 2016 remains unchanged; with full year EBITA anticipated to be around 20% lower than 2015, in line with previous guidance.

“Looking further ahead, we see early indications of modest recovery in some areas and believe our customer relationships, geographic footprint, strong financial footing and relentless focus on delivering value through our asset life cycle services and specialist technical solutions, position us well.”

Wood said “bolt-on mergers and acquisitions” remained a focus and is its preferred use of cash.

In the first half of the year, Wood completed two small acquisitions in its engineering business and acquired a further non-controlling interest in its Saudi Arabian engineering business.