Amec Foster Wheeler toughing out weak market with £120m savings

INTERNATIONAL engineering group Amec Foster Wheeler has reported a fall in revenue amidst “tough market conditions” and has set a £120m target for cost savings by 2017.

In the nine months to the end of September the Knutsford, Cheshire-headquartered firm’s revenue was £3.87bn (2014: £3.94bn), 1.8% lower than last year’s pro forma result, and 3.4% lower on a like-for-like basis.

Second half margins are now expected to be lower than in H1 in the light ongoing weak markets, the company said, with dividend payments slashed by 50%.

As result, savings targets increased to £120m by 2017 with renewed focus on improving performance – or exiting – low growth areas of the business.

Chief executive Samir Brikho 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 50%, starting with the final dividend for 2015.”