Oil and gas services firm Wood Group PSN said it would continue to cut cost this year as it prepares to face challenging conditions “for the forseeable future”.
Bob Keiller, the chief executive of the Aberdeen-based company, said the company expects to make costs savings of about £20million this year which would include job cuts across the firm’s global operations.
But he added that these would be “nothing like” the “scarily large numbers” rivals and peers in the sector – including Baker Hughes and BG Group – have announced.
Shares in the engineering firm surged over 10% in early trading when its results to the end of 2014 were announced yesterday, although this settled to a 4.7% rise to 660p by the end of the market’s day.
The FTSE250 company said pretax profit for the year rose nearly 3% to £276million. Also pleasing investors was a pledge to “increase US dollar dividend per share from 2015 onwards by double digit percentage”.
The firm said it would recommend a final dividend of 18.6c, taking the full year payment to 27.5c, an increase of 25% on the prior year.
The firm said that income from US shale through its PSN division soared over $1billion, boosted by a number of acquisitions in the year.
Mr Keiller admitted that this side of the business was “not immune” from the effects of low oil prices which has seen exploration drop in the US as well.
But he added that the firm’s US onshore operations were spread across a range of operational expenses and capital expenses and in different geographies.
“We’re definitely not immune from it. We will see some challenges on that capex end but perhaps less so than somebody that is involved purely on the rig side,” he said.
The firm said it had secured more than £978million worth engineering, procurement,construction and maintenance contract renewals in the North Sea last year, which gave the firm “good visibility” in 2015.
Mr Keiller said the cost cutting exercise this year would take place across the 50 different countries in which it operates.
“It will be things like reducing discretionary spend, tightening our spend controls, cancellation of activities that don’t need to take place in the year. And there will be some cuts of staff across the group.
“When you put it together in context of $7billion (£4.6billion) in revenues – it is relatively small. We feel our overhead is relatively tight anyway.”
In total, Wood Group’s revenue rose 8% to £4.95billion, with its PSN business the strongest performing part of the business.
With operations in 50 countries, the strongest performing part of the business was in production services, known as Wood Group PSN.
It saw earnings before tax and interest rise by 30%, driven by last year’s performance in US shale and growth in its North Sea business.
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