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UK energy group Amec Foster Wheeler reported a more than doubling in pre-tax losses last year as it prepares for a £2.2bn merger with rival Wood Group.
Reporting its full year earnings, Amec said it expected another year of decline in its oil and gas business this year, while its solar operations would see “significant” reductions after a record 2016.
The company said its total losses before tax hit £542m last year from £235m the year before, while revenues slipped to £5.4bn from £5.45bn. Adjusted profits before tax fell 24 per cent to £254m and it confirmed it would be suspending all dividend payments “until sustainable free cash flow is being generated”.
Last month, Wood Group agreed an all-share takeover of its struggling competitor in a deal that underscores the challenges facing Britain’s North Sea industry. Both companies provide services to infrastructure and renewable energy projects as well as the oil industry. Amec said its shareholders would vote on the deal in June.
Revenues in Amec’s oil, gas, chemicals and mining divisions all declined last year, offset by growth in its renewable environment and power & processing operations.
The company was also hit by higher impairment charges of £526m last year, a climb from £315m in 2015 and driving it to a loss before financing expenses of £482m.
Chief executive Jon Lewis said:
Given conditions in natural resources end markets, our 2016 trading performance was robust, as we benefited from the breadth of our business – especially the record performance from solar – cost saving actions and the fall in sterling in the second half of the year.