2nd Jun 2015 06:28
LONDON (Alliance News) - Amec Foster Wheeler PLC Tuesday warned its scope revenue will be "modestly" lower in 2015 than in 2014 and that its trading margin will suffer a "further modest reduction" compared to its previous guidance, as challenging conditions in the upstream oil and gas industry continues.
The FTSE 250-listed oil services company also said its expects trading profit to be more second half weighted than in 2014.
Amec Foster Wheeler said scope revenue was GBP1.60 billion in the four month period to end-April, falling from GBP1.62 billion a year earlier. Amec Foster said revenue was down 0.9% on a pro-forma basis and down 3.6% on a like-for-like basis.
At the end of April, the company had an order book of GBP6.70 billion compared to GBP6.30 billion at the end of 2014, representing a 6.3% rise.
Amec Foster said the oil and gas market trends seen in recent months have continued with customers continuing to delay project sanctions for discretionary capital spend, particularly in upstream. Growth in downstream continues, notably in the US and the Middle East.
In clean energy, the company has seen some project delays in the North American renewables market, whilst in Europe, recent contract wins in the nuclear and transmission and distribution markets have contributed to the growth in the long-term order book.
The company is expecting current revenue trends to continue in 2015, with growth in downstream and in Middle Eastern oil and gas markets, offset by other conditions "elsewhere", it said.
"Overall, we now expect pro-forma like for like scope revenue to be modestly lower in 2015. On current market forecasts, the reversal of the currency headwinds we experienced in 2014 will add approximately GBP150 million to scope revenue," said Amec Foster Wheeler.
"Continued customer pricing pressure, particularly in the oil and gas market, is expected to generate a further modest reduction in the 2015 trading margin, compared to previous guidance," it added.
The company said its cost savings plan remains on track, aiming to deliver GBP40 million of savings, and "an exceptional charge" of GBP50 million in 2015, leading to annual benefits of around GBP85 million.
"In the first four months of the year we have experienced some challenging conditions. We have seen the benefits of our low-risk, multi-market model support our top line performance, and deliver growth in the order book to a new record," said Chief Executive Samir Birkho.
By Joshua Warner; [email protected]; @JoshAlliance
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