Profits at oil services firm Wood Group have dropped 86.7% due to extra costs relating to its takeover of rival Amec Foster Wheeler, as well as challenging market conditions.
In its half-year trading update the firm announced profit was down from £35M in June 2016 to £4.6M this year. The squeeze is due in part to exceptional costs of £37.4M, including £19.4M in respect of the Amec takeover, which is expected to complete in the fourth quarter of this year.
Other costs relate to a legacy contract carried out by its Gas Turbine Services business and redundancy expenses.
Earlier this month the Competition and Markets Authority expressed concerns over the Wood Group and Amec Foster Wheeler merger, leading both companies to offer to sell off some of Amec Foster Wheeler’s North Sea assets.
Amec Foster Wheeler is currently facing an investigation by the Serious Fraud Office for potential bribery and corruption offences.
Despite the sharp dip in profits, Wood Group said it still anticipated a stronger second half of the year.
“First half performance was down on 2016 reflecting the different market conditions across our business,” said Wood Group chief executive Robin Watson.
“Our full year outlook is unchanged and we anticipate a stronger second half performance. In June shareholders overwhelmingly approved our offer for Amec Foster Wheeler which will accelerate our strategy to create a global leader in project, engineering and technical services across a broad range of industrial sectors, the largest of which will be oil and gas. We remain on track to complete the transaction in the fourth quarter.”