The knock on effects of the slump in oil prices has seen more than 5,000 workers at Wood Group lose their jobs since December.
The oil services company said first half profits fell by 7.4% to $225.9 and revenues were down 19% amid crude prices which are at a six year low. It cut its workforce of around 41,000 worldwide by 13%, saving $40m. in overhead costs and expects total benefits of $80m for the full year. Bob Keiller, chief executive, said:
Conditions in oil and gas markets remain very challenging. Performance in the first half demonstrates our commitment to cost discipline and the resilience and flexibility of Wood Group’s through cycle model.
Our outlook for 2015 overall remains unchanged and we anticipate that full year performance will be in line with analyst consensus. 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.
Wood’s shares have fallen 21p to 558.5p despite a 10% increase in the dividend and news of a new contract with Shell.
Rohan Murphy, European oil service analyst and co-manager of Allianz Energy Fund, said:
[The results] display not only the magnitude of the current oil and gas slowdown but also what the service industry is doing to counter the slowdown in terms of headcount and general overhead cost reduction.
Companies like Wood Group which are capital light can be dynamic in downturns like these, executing cuts to their main asset which is people, but they can also develop in these scenarios through problem solving for their clients.
