Amec Foster postpones Capital Markets Day, still to decide on funding structure

The company also announced proposed investments and a reduction in overheads which would cut its annual cost base by another £100m but negatively impact trading in 2017.

"We are on course to deliver resilient trading results for this year and next despite the continuing weakness in some of our key markets. This is only possible due to the diversity of our business and the initial contribution from additional sustainable cost savings we started in June," Jon Lewis, chief executive officer of Amec Foster Wheeler, said.

Significantly, the company also announced it would provide more details on the timing and costs to achieve those savings alongside its full-year results, together with a final decision on the right mix of investment and funding options for the firm.

Linked to the above, Amec postponed the date of its next Capital Markets Day from 15 November to 21 March 2017.

As part of its ongoing strategis and operation review, the company announced that from January it would replace the existing geographical reporting structure with four market-based business lines: oil and gas, power, mining, and environment and infrastructure. It will also create a new ‘Exco’ with ten direct reports to the chief executive, the majority of whom will be in new roles.

The review identified multiple long-term opportunities to offset the current headwinds in traditional areas such as offshore greenfield oil and gas and mineable oil sands.

Around 650 surplus roles were identified, with AMEC adding that it intended to close offices and go ahead with plans to outsource back office functions to low cost locations as it works to take an additional £100m out of its annual costs.

Three assets were to be sold with combined proceeds expected before the end of the year of around £100m.

The company is in talks to sell the boiler business and the rest of the Global Power Group unit to separate buyers, while it targets £500m worth of disposals by June 2017.

"We believe this is our best option to achieve an acceptable level of proceeds," Amec said.

For the nine months ended 30 September, revenue was up 3% to £4.1bn, compared to last year, and 3% lower on a like-for-like basis.
The order book stood at £6.1bn, compared to £6.2bn at the half year.

Sterling weakened against most of the company's operating currencies, boosting reported numbers, but also its net debt.

Even after £100m of proceeds from disposals, the weakness in the pound and restructuring charges were expected to push the company´s net debt to £1.1bn by year-end.

For 2017, AMEC expects another year of oil and gas decline and for solar activity to reduce from the record levels this year, which will be offset by growth from environment and infrastructure, mining and a contribution from cost savings.

"To offset the current market challenges, we need to do more to establish the full potential of these growth opportunities and the optimal configuration of our portfolio, and therefore the best actions to deliver the appropriate balance sheet and sustainable returns to our shareholders," Lewis added.

"With the business review ongoing they have postponed their Capital Markets Day until the new year on 21st March with FY results. Market looks to be of the view that the company may need to raise more capital in due course," commented Jamie Constable at N+1 Singer.

Shares in Amec Foster Wheeler were down 17.93% to 480.20p at 0836 BST.