Wood Group cuts workforce by 10% as profits slide by 7.4%

Bob Keiller, Chief Executive, Wood Group
Bob Keiller, Chief Executive, Wood Group

By DARA BUTTERFIELD

Wood Group plc has said that it has cut more than 10% of its staff since December and recently reported a 7.4% reduction in core profits during the first half of the year.

The company has made the cuts to remain competitive amid what it has called challenging conditions in the industry. Despite this in the first half of 2015 the firm saw profits drop from $243.9m to $225.9m.

Bob Keiller, CEO, Wood Group plc, commented: “Conditions in oil & gas markets remain very challenging. Performance in the first half demonstrates our commitment to cost discipline and the resilience and flexibility of Wood Group’s through cycle model.

“Our outlook for 2015 overall remains unchanged and we anticipate that full year performance will be in line with analyst consensus. With little prospect of short term improvement in market conditions, we will focus on remaining competitive and protecting our capability, working with clients to reduce their overall costs, increase efficiency and safely improve performance.”

The company acquired Wyoming-based services company Elkhorn, serving the Niobrara, Permian, Marcellus and Utica shale basins in the U.S. for $215 million, singling out the U.S. shale sector as among its strengths. Last year the firm said it had about 4,500 people employed in its various activities “across the most significant U.S. shale plays.”

Keiller continued: “Group headcount is down 13 percent from the position in December and 17 percent from June 2014.”

The half year results stated:

  • Total revenue down 19.3% at $3,069.0m (2014: $3,801.2) and Total EBITA down 7.4% at $225.9m (2014: $243.9m) against a backdrop of reduced activity throughout the oil services sector
  • Total EBITA margin of 7.4% (2014: 6.5%) benefitting from overhead costs savings of $40m
  • Unchanged outlook for 2015; anticipate full year EBITA in line with expectations
  • Revenue from continuing operations on an equity accounting basis down 17.6% at $2,656.9m (2014: $3,224.4m)
  • Profit from continuing operations on an equity accounting basis before tax and exceptional items down 14.3% at $156.3m (2014: $182.4m)
  • Adjusted diluted EPS of 40.1 cents (2014: 44.4 cents), down 9.7%
  • Interim dividend of 9.8 cents (2014: 8.9 cents) up 10.1%, in line with intention to increase the dividend per share by a double digit percentage from 2015 onwards
  • Net debt, including JVs, of $277.2m (2014: $427.4m). Net debt: annualised EBITDA ratio of 0.5x, at lower end of targeted range

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