First half earnings from oil services engineer Wood Group were down more than expected due to a challenging North Sea performance, though a stronger second half is expected to keep the full year on track.
Revenue of £2.28bn for the first six months of the year was down 11% on the same period last year, with earnings before interest, tax and amortisation of £127m, which was down 24% year-on-year and well short of the $138m consensus of City analysts.
But as it battles the tougher environment created by lower oil prices and attempts to seal the acquisition of rival Amec Foster Wheeler, the FTSE 250 group still managed to cut overhead costs by $44m in the period.
The profit for the period of just £6m is stated after exceptional costs of $48m, including $25m relating to Amec.
Anyhow, feeling confident of completing the acquisition in the fourth quarter, with the Competition & Markets Authority having recently expressed its approval in principle and expected to make its final decision on 12 October, the board lifted the interim dividend 3%.
Chief executive Robin Watson said the first half performance was down on 2016 due to the different market conditions across the business, with the “particularly challenging” North Sea market led to a weaker performance in the Asset Life Cycle Solutions East division that offset a “robust” performance in ALCS West and growth in Specialist Technical Solutions.
“Our full year outlook is unchanged and we anticipate a stronger second half performance,” he said.
He said the addition of Amec “will accelerate our strategy to create a global leader in project, engineering and technical services across a broad range of industrial sectors, the largest of which will be oil and gas“.