Wood Group, a company providing services to the international oil and gas industry, has so far this year laid off 13 percent of its workforce, aiming to cut costs amid the downturn in oil and gas industry activity.

The company on Tuesday said that a decline in industry activity sparked by a drop in oil prices,“has inevitably resulted in headcount reductions.”

Group headcount is down 13% from the position in December and 17% from June 2014.

While Wood Group did not provide the exact number of the people laid off, the company’s full year 2014 report shows it had 39300 employees at the end of 2014.

This would mean that 5109 workers have lost their jobs in the first half of 2015.

A Wood Group spokesperson has confirmed the number of around 5.000 affected. This includes approximately 3.000 in the US, 1.000 in the UK and 1.000 in the Middle East

The company has said that the number of people includes both employees and contractors at 30 June 2015 and includes its proportional share of headcount in joint ventures.

“We anticipate that the full year benefit of overhead cost savings will be in excess of $80m and that the impact of these savings will endure in 2016. To achieve this, we have reduced headcount and discretionary spending, put tighter controls in place, accelerated shared service programmes, and are continuing with our pursuit of back office efficiencies,” Wood Group said in a statement.

Bob Keiller, CEO of Wood Group plc, said:

“Conditions in oil & 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.”

Financial highlights

Total revenue1 down 19.3% at $3,069.0m (2014: $3,801.2) and Total EBITA down 7.4% at $225.9m (2014: $243.9m) against a backdrop of reduced activity throughout the oil services sector

Total EBITA margin of 7.4% (2014: 6.5%) benefitting from overhead costs savings of $40m.

Unchanged outlook for 2015; anticipate full year EBITA in line with expectations

Revenue from continuing operations on an equity accounting basis down 17.6% at $2,656.9m (2014: $3,224.4m)

Profit from continuing operations on an equity accounting basis before tax and exceptional items down 14.3% at $156.3m (2014: $182.4m)

Adjusted diluted EPS of 40.1 cents (2014: 44.4 cents), down 9.7%

Interim dividend of 9.8 cents (2014: 8.9 cents) up 10.1%, in line with intention to increase the dividend per share by a double digit percentage from 2015 onwards

Net debt, including JVs, of $277.2m (2014: $427.4m). Net debt:

annualised EBITDA ratio of 0.5x, at lower end of targeted range

Operational highlights

Continued focus on actions to offset the impact of lower activity and pricing pressure

Working with customers to reduce project costs, increase operating efficiency and safely improve performance

Strict focus on utilisation; Group headcount down 13% since December

Overhead cost savings of $40m achieved in the first half, significantly ahead of initial estimates.

Secured new long-term awards in the North Sea for Antin, Gabon for Shell in PSN and in Saudi Arabia and Mexico for Engineering.

PSN Production Services - Revenue down 21.7% reflecting lower activity particularly in the Americas, where we saw strong growth in US shale in 2014, and the North Sea. EBITA margin slightly increased; cost reductions and reduced acquisition deferred consideration provisions helping to offset pricing pressure

Engineering - Entered 2015 with reasonable backlog. Revenue down 10.9% however EBITA margin slightly up reflecting good activity and improved margins in onshore pipeline and downstream offsetting the impact of pricing pressure and the deferral and cancellation of projects in Upstream and Subsea. Benefitting from overhead cost reduction, focus on utilisation and the contribution from Agility acquisition

Source: www.offshoreenergytoday.com

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