The Aberdeen-based company said it would save more than $30m (£20m) by reducing and deferring spending in the current financial year, and would cut its number of employees.
Chief executive Bob Keiller told City analysts: “We will be reducing our headcount in areas of overhead spend.”
Keiller said the company would also limit employee travel, reduce spending with other companies and cancel staff conferences.
Keiller declined to say how many jobs might be cut from Wood Group’s 38,000 workforce but indicated that some would be in the UK. He told analysts that a 45-day consultation period was standard in Britain but that less time was required in North America.
“There is nothing inherently there that would stop us doing it, provided we do it in a measured, responsible way in line with local custom.”
Wood Group employs 11,500 workers in the UK, including about 4,200 in the North sea, where analysts say oil fields could be forced to shut down without government help for the industry. On Monday, Scotland’s first minister Nicola Sturgeon called for urgent tax changes to encourage investment.
Wood Group announced the spending cuts as it unveiled pre-tax profit excluding exceptional items up 2.9% to $424.2m for the year ended 31 December. The company increased its annual dividend by 25% to 27.5 cents a share and said it expected the dividend to rise by at least 10% this year and beyond.
The company said its customers were trying to cut costs after the price of Brent crude fell from $115 in June to close to $60 this week. But Wood Group said it was positioned to withstand low oil prices because a big part of its business was advising energy groups how to operate more efficiently.
“We are going into a headwind but we are going in with some momentum,” Keiller said.
The share price rose more than 10% in response to the management’s upbeat tone and was up 9% at 686.5p during lunchtime trading in London.
BP, one of Wood Group’s customers, and Royal Dutch Shell have both announced big cuts in capital spending for this year. BP has cut hundreds of jobs in Aberdeen and thousands around the world, and has frozen pay for its workers.
Wood Group said it would benefit from its recent acquisition of Swaggart, a US construction company for the oil industry, and said it expected a good long-term market for its shale activities.
The International Energy Agency said this month that lower oil prices would cause a pause in the US shale boom but that it would remain the biggest source of supply growth for the next five years.
Wood Group, founded in 1912 as a ship repair and marine engineering firm, said it had opportunities to expand in the Middle East, Africa and Australasia.
Oil industry cuts
- BP is halving exploration activity and reducing overall spending by 20% after suffering a $1bn loss in the final quarter of the year as a result of low oil prices.
- Shell is cutting spending by $15bn over three years and has warned the government that North sea operations are at risk without tax cuts.
- Tullow Oil is slashing operating expenses by $500m over three years and has suspended its dividend after suffering a $2bn annual pre-tax loss.
- BG Group plans to cut investment spending by almost a third this year after being forced to write down the value of its assets by £6bn.
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