Wood Group chief executive Robin Watson said yesterday more acquisitions by the energy services giant were “very much on the cards”.
He highlighted an “active pipeline” of targets which the Aberdeen-based group is reviewing on a monthly basis.
“Our appetite for mergers and acquisitions (M&As) is undiminished,” Mr Watson said, adding the firm was always in the market for “good quality” businesses meeting the requirements of its long-term growth strategy.
Wood Group delved into its acquisition war chest last April, snapping up Australian company SVT Engineering Consultants and its operations in Perth and Brisbane for an undisclosed sum.
Mr Watson was speaking after the company posted 2016 results “in line with expectations”, with pre-tax profits from continuing operations down by more than half at £53million.
Total revenue, including from joint-ventures, was nearly 16% lower at £3.96billion amid punishing trading conditions.
Wood Group cut its scaled-down workforce by a further 6,400 people as part of its cost-cutting, leaving the total of just under 29,000 about 36% leaner than two years ago.
“These are tough times,” Mr Watson said, adding the global oil and gas market continued to present challenges in 2017.
“We have felt since last August that it has been bobbing along at the bottom,” he said.
Wood Group’s strong reputation globally had kept business coming in during the downturn but profit margins were “tighter” than ever, he said.
The company will focus on offshore upstream and US onshore shale projects as growth markets this year, while contracts in Australasia are also expected to keep it busy.
Middle East markets have been earmarked as key as the company continues to diversify and globalise.
“If you went back two and half years, we were 95% oil and gas,” Mr Watson said, adding: “This year, we estimate we are about 85% oil and gas. We have re-balanced.
“We do see oil and gas as the remaining core market for Wood Group but we are very thoughtful about making sure that we’ve got the right balance.”
North American shale is seen as a good long-term bet, and Mr Watson said the group had been “modestly” increasing its head count in its operations across the Atlantic in recent weeks.
Giving his outlook for 2017, chairman Ian Marchant said the flexibility of Wood Group’s business model, market-leading position and the impact of bolt-on M&As were key to delivering financial performance in line with expectations.
Mr Marchant added: “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 and gas market that has recalibrated to a lower-for-longer commodity price environment.”
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