Tough oil market hits Amec Foster first half trading profits

Oil and gas services company Amec Foster Wheeler said first half trading profits fell 8% to £162m as weak upstream oil and gas markets took their toll.

The company, which is in the process of being taken over by rival John Wood Group, said revenue fell 18% to £2.33bn.

On a pre-tax front, the company swung to a profit of £77m from a loss of £446m a year earlier.

"I am encouraged that the first wave of benefits of the transformation programme we began last year is now evident,” said chief executive Jon Lewis.

“Operational discipline has improved, we have more than delivered on our cost saving targets and we have also seen the first tangible signs of sustainable growth: in the retained operations, trading margin is up 180 basis points compared to H1 last year with a 2% increase in the order book since the year end.”

“Although, as expected, some of our end markets remain challenging, I am pleased that we are making progress across the business - reinforcing the value of a multi-discipline and multi-market customer offering.”

Lewis said he expected the deal with Wood to be completed in the fourth quarter.

The UK's Competition and Markets Authority said earlier this month that the deal could lead to competition concerns in the supply of engineering and construction services and operation and maintenance services on the UK continental shelf.

Total order book value for the company stood at £5.6bn, compared with £6.2bn last year. Amec's oil, gas and chemicals unit's order book fell 3% to £2.9 billion pounds.

In a separate announcement, Amec said its Australasian Clough Amec joint venture had won a contract to provide maintenance services to ammonia facilities in Western Australia that supply international and domestic fertiliser markets and explosives used in the mining industry.

The five-year deal, with an option to extend to 2027, is Clough AMEC's first entry into Australia's petrochemicals sector.