(Reuters) - Oilfield services company John Wood Group Plc (WG.L), which bought smaller rival Amec Foster Wheeler last year, on Tuesday forecast a modest growth in core profit for 2018 after reporting an 11.1 percent fall in full-year earnings.
Wood Group, which saw muted demand for its services over the last couple of years after oil producers cut budgets amid weak prices, said it expects early stage recovery in some areas of its core oil & gas market and cost synergies to boost its earnings before interest, tax and amortization (EBITA) in 2018.
However, the company’s 2017 EBITA fell to $598 million from $673 million a year earlier on a pro forma basis, hurt by cost overruns on some non-oil and gas contracts.
Revenue also fell 12 percent to $9.9 billion on a pro forma basis.
Wood Group said its annualised cost savings from the Amec deal was ahead of plan with more than $40 million delivered to date. The company added it was confident of meeting its target of at least $170 million savings in three years from deal completion.
British oil services companies, including Wood Group, Amec and Petrofac (PFC.L), have faced issues after UK’s Serious Fraud Office launched a criminal probe last July into Monaco-based Unaoil in connection with suspected bribery, corruption and money laundering.
Wood Group said its internal investigation confirmed that a legacy Wood Group joint venture made payments to Unaoil under agency agreements, and added the company was working with Scotland’s Crown Office and Procurator Fiscal Service and the SFO.
The company said it was also co-operating with the U.S. Securities and Exchange Commission and the US Department of Justice on their ongoing investigations into Amec related to Unaoil.
Reporting by Arathy S Nair in Bengaluru; Editing by Gopakumar Warrier and Vyas Mohan