Yahoo Finance Losses spiral at troubled Amec Foster Wheeler
Losses at Amec Foster Wheeler have more than doubled as the energy services group prepares to be taken over by rival Wood Group.
Posting annual results, Amec revealed a £542m pre-tax loss, up from £235m last time round, on revenues flat at £5.4bn.
Amec designs and operates equipment for offshore and onshore oil and gas companies and operates in 55 countries.
It has been hit hard by the collapse in the energy industry with the price of crude plunging to around $50 per barrel, less than half the level it was at two years ago. The slump has resulted in an estimated £200bn of investment being abandoned as oil and gas businesses slash capital expenditure.
However, Jon Lewis, chief executive of Amec, described the company’s performance as “robust... given conditions in natural resources end markets”.
The wide range of FTSE 250-listed Amec’s interests - it caters to sectors as diverse as mining, pharmaceuticals, environment and infrastructure - bolstered the results.
Mr Lewis noted that Amec’s solar power unit delivered a record performance, shoring up the results, with cost cuts and the fall in the pound also helping. Amec reports in sterling so the crash in the pound's value in the wake of the EU referendum has lifted its performance at a headline level.
Looking ahead Mr Lewis predicted “another year of decline in oil and gas activity in 2017 and for solar activity to reduce significantly from the record levels seen in 2016. It is also expected that there will be a better performance from environment and infrastructure and a further significant contribution from overhead cost savings”.
The dividend has been halted until the business is on a “sustainable” footing, meaning that the previously announced interim payout of 7.4p will not be added to this year. Last year’s dividend totalled 29p.
Despite Amec’s problems, Wood Group is set to buy the business in a £2.2bn all-share deal, which is expected to be voted on by Wood shareholders next month.
Wood has previously indicated that the tie-up could generate annual savings of £150m a year by the third year after the deal has closed.
Separately, North Sea producer Premier Oil is closing in on a long-awaited refinancing of its debt that will assure its future. The company said more than 75pc of holders of convertible bonds had agreed to a deal committing them to back a refinancing of the group’s $2.8bn of debt. Premier needs the deal in order to relax the debt covenants that loomed over it during a two-year oil market downturn that wiped 80pc from its market value.
