Engineering giant Amec hit by decline in key markets

Engineering group, which has bases in the North East, says profits and cash flow generation will be second half-weighted

Samir Brikho, Amec chief executive
Samir Brikho, Amec chief executive

Financial performance at the engineering giant, Amec, has been hit by a decline in greenfield activity in several key markets.

Results for the first half of 2014 show the group, which has bases in Newcastle and North Shields, suffered a 7% drop in revenue, compared to the same period in 2013, falling to £1.86m.

EBITA, meanwhile, fell 4% to £152m, while profit before tax decreased 29% to £83m.

However, underlying revenue - excluding the impact of acquisitions, disposals, currency fluctuations and changes to levels of pass through incremental procurement - saw a 4% rise during the period, which also produced stable margins.

Group chief executive Samir Brikho said: “As expected, we are seeing less greenfield activity in some of our key upstream oil and gas markets, which is partially offsetting the strong growth from Clean Energy and Middle Eastern Oil & Gas.

“We now expect to see modest underlying revenue growth in 2014 for our existing operations.

“As discussed previously, the mix of business will result in a slight reduction in group margins compared to last year.

“As in 2013, profits and cash flow generation will be second-half weighted.”

He added that good progress had been made since the acquisition of Foster Wheeler in February.

Integration planning was well underway and completion was now expected early in the fourth quarter.

“We believe the combination of AMEC and Foster Wheeler is a compelling one, for our shareholders, our customers and our employees,” he said.

“A 10% increase in the interim dividend signals our belief in the underlying strength of AMEC.”

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