Amec Foster Wheeler’s share price plummets 19 per cent as group warns oil and gas sector to decline next year and postpones capital markets day
Shares in oilfield services firm Amec Foster Wheeler sunk 19 per cent this morning after the group said it was bracing for further declines in the oil and gas sector next year.
Amec said it was expecting activity in its solar business to "reduce significantly" from the record levels seen this year, though it added that shortfalls would be offset by continued growth from its engineering and installation arm, mining and a "significant contribution from cost savings".
The London-based oil and gas engineer also postponed its capital markets day from November until March next year, saying it needed more time to complete a strategic review of its business structure, the results of which had been due in the autumn.
Read more: UK's largest oil and gas engineer Amec clinches two North Sea contracts
Amec's share price was down 18.75 per cent in late morning trading to 475.7p.
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Investors were spooked despite the firm pledging to make an additional £100m in cost cuts this year. The group has adopted aggressive measures to try to slash its debt, including halving its 2016 dividend and targeting £500m of disposals by next June.
The group also instated a former Halliburton executive, Jonathan Lewis, to oversee the restructuring process in April.
Oilfield services groups have been hit across the board by weak oil prices, which have prompted oil producers to slash their own spending.
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Revenue was up three per cent at £4.1bn in the nine months to 30 September, Amec said in a trading update today, though turnover was three per cent lower on a like-for-like basis.
The order book stood at £6.1bn at the end of September, compared to £6.2bn at the half year. Year-end net debt is forecast to reach £1.1bn.
Chief executive Jonathan Lewis said:
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 form additional sustainable cost savings we started in June.
To offset the current market challenges, we need to do more to establish the full potential of … growth opportunities and the optimal configuration of our portfolio.