Amec Foster Wheeler beats first-half forecasts, review due in autumn

Amec Foster Wheeler's higher sales and lower earnings in the first half were better than the market expected, while the engineer also impressed with cost cutting and its continued expansion into renewable energy.

Revenue in the six months to 30 June of £2.8bn was up 7% on the same period last year, beating consensus expectations of £2.5bn, and 4% higher on a like-for-like basis.

First-half trading profit of £177m, which excluded £440m of non-cash impairments - mostly directly against goodwill, was down 6% but better than consensus forecasts of £158m.

The £440m of non-cash impairments include £125m in Americas O&G and £246m in GPG division.

Adjusted earnings per share of 28.2p was down 17% but above consensus expectations of 24.5p.

The order book was 9% smaller than at year ago at £6.2bn, mostly from the Americas.

Net debt also shrank to £1.08bn from £1.16bn at end March but was up 13% year on year as sterling weakened. By the year end, with the effect of the pound and anticipated higher restructuring costs, management expect debt to be around £1.1bn, though this is before the effect of the £500m targeted disposals.

New chief executive Jon Lewis said he expects to complete a "wide-ranging" review of Amec's strategy, organisation and costs by the autumn and kept guidance for the full year unchanged.

"Our industry continues to face very challenging conditions, with capital projects across natural resources markets being delayed and cancelled in many parts of the world," he said.

"Despite this, we continue to benefit from the diversity of our platform and we remain on track to deliver the operational guidance we gave at the beginning of the year."

Analysts at Societe Generale said the order book showed Amec was remaining "relatively resilient" in the current environment.

"Our first thoughts on Amec FW’s 1H results are positive. In addition to the headline figures, we note the following positive steps taken by AMFW: 1) Cost reductions, with headcount having at last been reduced circa 10% to 36,000; and 2) AMFW is now well advanced on its own in energy transition thanks to the US solarium win. We also note that the new CEO comes across as less ‘promotional’ than his predecessors, who would likely have led on the ‘beat’."

Shares in AMFW were up almost 10% to 513p, around their highest point in 2016.