Amec Foster Wheeler has announced its second half trading update, admitting a continuing tough market means it is increasing cost cutting targets and slashing future dividend payments.
In the update, the firm said that second half margins are now expected to be below those in the first half of the year. The group cost savings target has been increased by £37M to £120M by 2017. Shareholders will see the dividend cut by 50%.
Chief executive Samir Brikho (pictured) said: “Amec Foster Wheeler is a high quality and diversified business, and its financial performance remains relatively resilient, as the performance so far this year shows. However, 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.”
The company’s order book stood at £6.5bn at the end of September, compared to £6.6bn at the half year.