LONDON (Alliance News) - Amec Foster Wheeler PLC Thursday reported a dip in pretax profit in the first half of 2015 as market conditions remained challenging in light of lower oil prices, but the company said it is confident it can meet full-year expectations.
The oil and gas services company reported a GBP73.0 million pretax profit in the six months to June 30, falling from a GBP83.0 million profit a year earlier, as revenue rose to GBP2.66 billion from GBP1.85 billion.
However, scope revenue, which is revenue less pass-through procurement revenue, fell to GBP2.58 billion from GBP2.61 billion.
Profit before tax, amortisation and exceptional items came in at USD165.0 million, which was up from GBP148.0 million a year earlier.
Amortisation and exceptional items knocked off GBP92.0 million from its pretax profit, whereas the year before it only came in at GBP65.0 million.
The company kept its interim dividend flat at 14.8 pence per share.
Amec Foster Wheeler said it expects revenue to benefit by around GBP50.0 million in the full-year results from a stronger dollar.
Oil, gas and mining market conditions are anticipated to remain challenging, particularly the upstream oil and gas segment. The downstream segment, particularly petrochemicals, "remains resilient", it said.
The clean energy segment will generate slightly less full-year revenue than the last financial year due to delays to the start of work for significant projects in its order book, the company said.
Amec Foster Wheeler said it has a "strong pipeline" which stands at GBP6.60 billion, which it believes it can grow going forward. That order book is comprised of GBP2.10 billion from the Americas, GBP2.40 billion from Northern Europe and the Commonwealth States, GBP1.80 billion from Asia and the Middle East and GBP400,000 from its Global Power Group.
Since the start of 2015, Amec Foster Wheeler has won four new contracts. In the US, it has won a clean energy contract with Freeport McMorRan, an oil and gas project for D'Arcinoff, and the recently announced contract for up to USD5.0 billion worth of work with the US Air Force. It has also secured a contract in Canada for its clean energy business with Canadian Nuclear Laboratories.
"Our expectations for the group's full-year results remain consistent with previous guidance: underlying scope revenue is expected to be modestly lower than last year's pro forma result, and we continue to expect a reduction in trading margins," said the company.
By region, Amec said revenue from the Americas fell 2% to GBP1.26 billion from USD1.29 billion to generate a trading profit of GBP82.0 million, compared with GBP121.0 million a year earlier, as pressure on the oil and gas price took effect and squeezed its trading margin.
In Northern Europe and the Commonwealth of Independent States, Amec Foster Wheeler said revenue fell to GBP736.0 million from GBP847.0 million to deliver a USD70.0 million trading profit, which was up from GBP66.0 million.
In Asia, the Middle East, Africa and Southern Europe, revenue rose 9% to GBP518.0 million from GBP474.0 million to generate a 45% rise in trading profit to GBP33.0 million from GBP23.0 million, after Amec improved its margin though cost-cutting initiatives.
Amec's global power group, which designs and constructs boilers, pollution control systems and other aftermarket products and services to utility companies and power producers, reported a 15% fall in revenue to GBP195.0 million from GBP230.0 million, making a GBP21.0 million trading profit compared to a GBP58.0 million profit.
Back in 2014, Amec Foster Wheeler was born from the merger of AMEC and Foster Wheeler in a GBP2.0 billion deal. On Thursday, the company said the integration is still ongoing but that this will result in USD125.0 million worth of cost savings by 2017. In the first half, the company made GBP15.0 million of savings, but also booked a GBP22.0 million exceptional charge.
Capital expenditure rose in the half to GBP9.0 million from GBP7.0 million, and the company spent an additional GBP15.0 million on purchasing computer software in the period, which was also up from GBP12.0 million a year earlier.
Amec Foster Wheeler shares were up 3.5% on Thursday morning at 766.50 pence per share.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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