Wood Group ups dividend after slashing headcount 13% in six months

Battered by the crashing oil price, engineer Wood Group upped its interim dividend by 10.1% after slashing costs more than expected as its oilfield workforce was cut by a fifth in the face of tumbling sales and profits.

Revenue of $3.07bn in the first six months of the year was down 19.3% on the same period last year, with underlying profit down 17.6% to $2.66bn, and adjusted diluted earnings per share fell 9.7% to 40.1 cents.

Yet directors said their outlook for 2015 overall remained unchanged and that full year earnings before interest, tax, dpereciation and amortisation (EBITDA) will be in line with analyst consensus, giving them confidence to stick to their previous promise and lift the dividend to 9.8 cents.

With conditions in oil and gas markets remaining "very challenging", chief executive Bob Keiller said all efforts had been made to be disciplined with costs.

The $40m of overheads savings achieved in the first half were significantly ahead of original estimates and Keiller anticipated the full year benefit of overhead cost savings will be in excess of $80m and that the impact will endure into 2016.

Wood Group cut its global oil production services workforce by almost a fifth in a year, from 30,000 to 23,500, with group headcount down 13% since December.

Although the company also announced on Tuesday that it had won a new five year, multi-million-dollar contract with Shell, to provide services to four onshore oil fields in Gabon, the outlook remains dim.

Said Keiller: "With little prospect of short term improvement in market conditions, we will focus on remaining competitive and protecting our capability, working with clients to reduce their overall costs, increase efficiency and safely improve performance.”