Amec Foster Wheeler (AFW) has warned of “another year of decline” in oil and gas activity in 2017 after the engineering and project management firm’s losses more than doubled.
Pre-tax losses totalled £542million in 2016 compared to a deficit of £235million a year earlier at AFW, which will be bought over by Wood Group in a £2.2billion deal.
Group revenues were roughly flat at £5.4billion in 2016 as AFW confirmed its board had suspended all dividend payments “until sustainable free cash flow is being generated”.
London-headquartered AFW said weakness in oil and gas markets in most regions was partially offset by the group’s clean energy and environment and infrastructure divisions.
But the company said it enjoyed a higher level of oil and gas activity in the North Sea, driven by major offshore hook-ups.
Revenues for the Northern Europe and CIS region were in line with the previous year at £1.5billion.
AFW chief executive Jon Lewis said the firm’s trading performance had been “robust” in 2016 considering the market conditions it faced.
The company chalked up administrative expenses of more than £1billion, while cash balances were £410million at year end 2016.
Mr Lewis said: “We continue to expect 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 standalone overhead cost savings.”
The all-share deal with Wood Group, announced last month, has the backing of both companies’ boards and is expected to go through in the second half of 2017.
AFW, which employs about 35,000 people in more than 55 countries, said a shareholder vote on the Wood Group offer was expected in June.
Aberdeen-based energy service giant Wood Group will use the takeover to further help reduce its reliance on oil and gas.
It has predicted that the acquisition will result in efficiency savings of at least £150million a year.
Wood Group has remained tight lipped on the number of jobs will be lost as a result of the takeover, despite repeated calls for transparency from trade unions.
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