Wood Group retains cautious outlook going into 2017

Wood Group saw full-year 2016 profits sink amid challenging conditions in its core Oil & Gas market - describing the pricing environment as competitive - and said it remained cautious about the near-term outlook.

The oilfield services group saw total revenues shrink 15.7% over the twelve months ending on 31 December to reach $4.93bn.

Company boss Robin Watson said: "Despite challenging conditions in our core oil & gas market in 2016 the Group delivered financial performance in line with expectations. Results benefited from the robust management of utilisation and costs and one off benefits. We enter 2017 as One Wood Group, repositioned to enhance customer delivery and we are encouraged by their support for our services, albeit in a competitive pricing environment."

Together with a 0.6 percentage point drop in its earnings margins before interest, taxes and amortisation to 7.4%, that drove a 22.8% fall in its operating profits in EBITA terms.

Like-for-like revenues on an equity accounting basis were similarly weak, retreating 17.6% to $4.1bn.

Full-year profits plummeted 61.8% to $34.4m for adjusted earnings per share of 64.1 cents, 23.7% less than in the year ago period.

In a statement, Wood Group said it only anticipated a "modest" recovery in selected areas of the Oil & Gas market such as US onshore and greenfield offshore projects.

Watson added: "The oil & gas market continues to present challenges and we remain cautious on the near term outlook."

Nevertheless, the firm upped its total dividend by 10.0% to 33.3 cents, saying it would aim to maintain a "progressive" policy on payouts from 2017, taking into account both cash flows and earnings.