Profits slump more than 60% at oilfield services giant Wood Group as company axes 1 in 5 jobs

Annual profits at the Aberdeen-based global oilfield services conglomerate Wood Group slumped by 61.8% last year compared to 2015.

In the 12 months ending 31 December 2016, the company generated a profit of $34.4 million – compared to just over $90 million in the previous year – in a year in which its oil & gas markets ‘remained very challenging’.

Nearly 1 in 5 Wood Group workers (18%) lost their jobs during the year, while management reduced overhead costs by a further $96 million in response to a 40% fall in global E&P spending over the previous two years.

Robin Watson, Chief Executive, said: “Despite challenging conditions in our core oil & gas market in 2016, Wood Group delivered financial performance in line with expectations.”

Chairman Ian Marchant added; “Given the spending outlook for 2017 and the inherent lag of the impact on service company activity, we are cautious on the near term outlook for the group. However, we remain positive on the longer term recovery.

“The flexibility of Wood Group’s business model, market leading position and the impact of bolt on M&A were key to delivering financial performance in line with expectations.

“In particular, the management of utilisation and early and decisive actions taken on cost reduction and efficiency in 2015, which continued in 2016, partly mitigated the impact of the tough pricing environment and reduced volumes.

“Together, the impact of structural cost reductions and the organisational change will help ensure that Wood Group emerges from this prolonged downturn as a stronger, better business in an oil & gas market that has recalibrated to a ‘lower for longer’ crude oil price environment.”