Multi-national energy services company Wood Group just revealed how its revenue was utterly crippled by tanking oil prices.
The London-listed Wood Group confirmed in its results statement for the first six months of the year that revenue dropped by almost 20% and net profit fell by $US23.7 million (£15.2 million) to $US116.8 millon (£75 million) compared to the same period last year.
The group’s boss also reiterated to investors that they are already planning a range of cost cuts to battle against market conditions that have “little prospect of short term improvement.”
It has already cut headcount by 13% since December and said this contributed to overhead cost savings of $US40 million (£26 million) for the first half of this year. It added this “significantly ahead of initial estimates.”
“Conditions in oil & gas markets remain very challenging. Performance in the first half demonstrates our commitment to cost discipline and the resilience and flexibility of Wood Group’s through cycle model,” said Bob Keiller, CEO of Wood Group in the results statement.
“Our outlook for 2015 overall remains unchanged and we anticipate that full year performance will be in line with analyst consensus. With little prospect of short term improvement in market conditions, we will focus on remaining competitive and protecting our capability, working with clients to reduce their overall costs, increase efficiency and safely improve performance.”
On Monday, U.S. research group Cumberland Advisors’ David Kotok thinks oil could sink even lower. The worst may be yet to come.
“We could go back to $US15 or $US20, this is a downward slope, we don’t know a bottom,” Kotok said in a Monday morning interview on Bloomberg TV.