Amec Foster Wheeler Increases Cost Savings Target

Amec Foster Wheeler has increased its cost savings target to $180 million by 2017, marking a $55 million rise from its previous target of $125 million.

The revised target was outlined in the company’s second half trading update, which also revealed that Amec is placing a renewed focus on improving performance in, or exiting, low growth areas. The company expects that the “tough” conditions in upstream oil and gas will continue in 2015.

Samir Brikho, Amec Foster Wheeler chief executive, commented in a company statement:

“We are not immune to the ongoing tough market conditions and we are managing the business on the assumption of an extended period of weakness. For more than a year, across many parts of our business, we have seen customers reducing capital expenditure and putting more pricing pressure on the supply chain. We see no sign of these trends changing.

“At our half year results, I said our priorities were to adapt to challenging markets and to stay lean and efficient. We have decided to intensify our actions. We have identified, and continue to seek, further cost savings. We are committed to increasing our focus on higher growth markets. In parts of our business we need to do better, so we are progressing plans to improve performance or exit those markets. We believe that taken together these actions will underpin our performance. In light of the ongoing market conditions, we are taking the prudent step of cutting our ordinary dividend payments by fifty per cent, starting with the final dividend for 2015.”

Amec revealed that scope revenue in the nine months to the end of September 2015 was £3.871 billion ($5.953 billion), compared to £3.940 billion ($6.062 billion) in 2014. The group’s order book stood at £6.5 billion ($9.9 billion) at the end of September, compared to £6.6 billion (10.1 billion) at the half year.

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