Amec swings to loss in 2015 but outlook welcomed

Amec Foster Wheeler said it swung to a loss in 2015 but shares in the oil and gas engineer rose sharply as investors welcomed the company’s debt line and outlook.

The group posted a pre-tax loss of £235m compared with a profit of £155m in 2014 amid challenging conditions in the oil and gas markets.

Chief financial officer Ian McHoul said: "Our 2015 trading performance was in line with our November update. We expect the challenging market conditions to continue for the foreseeable future and our priorities remain the same.

"Our focus is to maintain our solid operational performance and drive our cost reduction and efficiency programmes.”

Amec announced plans to sell its Global Power Group unit and halve its net debt in the next 15 months through non-core disposals.

"2016 is expected to be another year of challenging market conditions across upstream Oil & Gas and Mining. However, our exposure to a number of end markets, including downstream Oil & Gas, renewables and government work means we expect to see only a slight fall in like-for-like revenue, and a reduction in trading margins significantly less than the decline in 2015,” McHoul said.

Amec expects net debt of around £1bn at the year end, which is lower than its guidance.

The company recommended a final dividend of 14.2p per share, which together with the interim dividend of 14.8p takes the total dividend to 29p, down from 43.3p in 2014.

Canaccord Genuity, which rates the stock at ‘buy’, said the results were in line in terms of the earnings and dividend, “but the excitement is in the debt line and the outlook”.

It said net debt of £959m at year-end was more than £100m better than its estimate, thanks to strong working capital inflows.

“We believe this is a very solid set of results and despite the recovery in the stock over the past two weeks we continue to see substantial upside,” Canaccord said.

At 0930 GMT, Amec shares were up 7.8% to 505.50p.