Wood Group revenues set to sag 20% in sluggish oil market conditions

leaking oil barrelAberdeen-based energy services conglomerate Wood Group has warned that its revenues for 2016 will be 20% lower at the year-end compared to previous 12 months.

In a statement issued after its annual meeting, the company said that market conditions ‘remain challenging’ in 2016 with further margin pressure in an environment of expected lower activity by operators.

It added: Year to date financial performance, although down on 2015, continues to benefit from the breadth of our offering, our focus on management of utilisation in response to demand, and structural overhead cost savings.

“We anticipate that full year EBITA to 31 December 2016 will be around 20% lower than 2015, in line with current analyst consensus expectations.

“The tough operating environment in the North Sea has persisted and we are seeing additional pressure on margins.

“We remain aligned with customers’ efficiency initiatives and in February we further reduced contractor rates to focus on reducing our cost base.

“In addition to renewals with Taqa and Nexen, our commitment to cost effective solutions was recognised in the award of a three year contract with Shell for maintenance and construction work on eight of their North Sea assets.

“This award predominantly replaces the scope under our previous contract. Our industrial services business also secured new work with Shell and with Babcock in the marine sector.”

Wood Group management remain focused on reducing costs and improving efficiency in readiness for when market conditions recover.

A trading update for the first half of the year will be provided on 30 June 2016.

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