HNTIY Hunting PLC (PK)

LONDON—Engineering and project management company Amec Foster Wheeler PLC cut its dividend on Thursday and issued a profit warning as it became the latest oil services firm to suffer from the historic decline in crude prices that has pummeled the sector.

Amec's share price plunged by more than a quarter on Thursday as it said its profit margins in the second half would be lower than in the first and braced itself for a long period of weak sales by slashing its dividend plan. Amec said that in the nine months to the end of September, its revenue excluding procurement of equipment for customers was 3.4% lower than the same period last year.

"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," Chief Executive Samir Brikho said in a news release.

Oil-field service companies like Amec have suffered the most from the drop in global oil prices to below $50 a barrel, from a peak of over $100 a barrel last summer, as demand falls for the equipment they provide such as drilling rigs, pumps and valves and services like engineering and oil project construction.

Their customers—oil companies such as BP PLC, Chevron Corp. and Royal Dutch Shell PLC among others—have reduced the number of developments they invest in and slashed billions of dollars in spending as their revenues have plummeted.

"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," said Mr. Brikho.

Amec's results come amid a rout in the sector. On Tuesday, U.K.-listed Hunting PLC, that manufactures and distributes products for oil and gas extraction, said it expected profits from continuing operations this year to fall to a 10th of its 2014 results.

This week, Weir Group PLC, a U.K.-listed pump and valve maker for oil and mining companies, said it had cut 400 jobs in the third quarter, including 140 from its oil and gas division—the majority from the North American workforce where Weir provides pressure pumps for shale drillers.

"We expect trading conditions to remain challenging through the fourth quarter with further declines in upstream oil and gas activity," said Weir Chief Executive Keith Cochrane in a news release.

Paal Kibsgaard, CEO of the world's biggest oil services company Schlumberger Ltd., told analysts last month that he didn't expect drilling activity to recover before 2017.

Schlumberger saw a near halving of its third-quarter profit as revenues fell 33% from a year earlier, while its next largest competitor, Halliburton Co., swung to a loss in the third quarter.

On Thursday, Amec said its dividend payments would be cut in half, starting with this year's final dividend, which will be around 14.2 pence.

Amec increased its cost-cutting target after a review found that a further $55 million could be cut from selling, general and administrative expenses and support functions. Savings are now expected to come to $180 million a year by 2017.

The company's order book was valued at £ 6.5 billion ($10 billion) at the end of September, down from £ 6.6 billion at June 30.

Independent analyst Malcolm Graham-Wood said there could be more bad news to come from Amec as a result of its $3.3 billion acquisition of U.S.-listed Foster Wheeler AG which completed last year.

"I fear that worse is yet to come and particularly in write-offs and impairment charges, at the year-end there is little doubt in my mind that these numbers could be substantial, the result of buying a company at the top of the cycle," he said.

Write to Selina Williams at selina.williams@wsj.com and Ed Ballard at ed.ballard@wsj.com

Access Investor Kit for "Weir Group Plc"

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=GB0009465807

Access Investor Kit for "CitiGroup Inc"

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US1729674242

Access Investor Kit for "Weir Group Plc"

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US94876Q1067

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

November 05, 2015 08:35 ET (13:35 GMT)

Hunting (PK) (USOTC:HNTIY)
Historical Stock Chart
From Oct 2024 to Nov 2024

Hunting (PK) (USOTC:HNTIY)
Historical Stock Chart
From Nov 2023 to Nov 2024