Wood Group this morning warned its financial performance for first half of the year is “weaker than anticipated”.
The service firm blamed a “significant reduction in projects and modifications work, particularly in the North Sea” for the lag.
Its output for the first half of the year in the Eastern Hemisphere, which covers the North Sea, is “materially down” on the last year’s output.
The trading statement read: “In the first half we have seen continued challenges in our core oil & gas market with modest recovery only in certain areas. Robust activity in the West including improved performance in offshore greenfield project engineering and commissioning is being more than offset by weaker activity in the East, where we have seen a further reduction in projects & modifications work, particularly in the North Sea.
“The impact of the tougher pricing environment in 2016, partially offset by the enduring benefit of structural cost reductions achieved in the last two years, will result in a reduction in first half margin as expected.”
The firm’s projects, modifications, operations and maintenance work were hit the hardest. Its subsea and turbine offerings showed “modest” improvement.
Wood Group is in the midst of a £2.2billion takeover of a more diverse Amec. The move exposes the firm to new markets and limits its risk.
Earlier this month, shareholders overwhelmingly approved the bid.
The trading statement added: “Our objective is to create a leader in project, engineering and technical services delivery across a broad range of industrial markets, predominantly focused on oil & gas. Our current focus is on integration planning ahead of completion, which is expected in the 4th quarter of 2017 subject to competition approvals.”
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