Wood Group finds extra £40 in annual cost cuts for Amec merger

Energy services firm Wood Group said it had found another £40m in annual savings as part of the £2.2bn agreed merger with rival outfit Amec Foster Wheeler.

Wood said this now meant it would see annual pre-tax cost synergies of at least £150m by the end of the third year after completion of the deal.

The company added it was also “confident of realising additional cost synergies that cannot be quantified for reporting at this time”.

The deal will create a company with a combined value of about £5bn. Wood estimated that the synergies would lead to one-off costs of about £190m in the first three years post-completion.

Wood said half the extra cost cuts would come from “efficiencies in operational procurement spend and the reduction of duplicate costs across country and regional leadership”.

A further 20% was forecast from duplicate costs across the board and senior management and the rest from the consolidation of overlapping office locations, the elimination of duplicated IT systems and the reduction of duplicate costs across central support functions, Wood said.