Job cuts and disposals at Amec Foster Wheeler
Engineering consultancy Amec Foster Wheeler, which has operations across the East of England, is combating shrinkages in certain sectors with a multi-faceted strategy designed to minimise exposure and optimise growth opportunities.
It includes hundreds of job cuts, further disposals of assets and business areas and some office closures.
CEO Jon Lewis said the board had made good progress in defining strategies for a new market-led operating structure and identified £100 million of additional, sustainable cost savings. A wide-ranging review of operations was ongoing and 2016 and 2017 trading were in line with board's expectations, he said.
Lewis said: “We are on course to deliver resilient trading results for this year and next despite the continuing weakness in some of our key markets. This is only possible due to the diversity of our business and the initial contribution from additional sustainable cost savings we started in June.
“We have made good progress on the wide-ranging review we initiated in the summer. This has reinforced my belief Amec Foster Wheeler is a strong brand, with great potential.
“The review has also confirmed a number of challenges and highlights a range of new opportunities across our markets, as well as a significant and structural cost saving opportunity.
“To offset the current market challenges, we need to do more to establish the full potential of these growth opportunities and the optimal configuration of our portfolio, and therefore the best actions to deliver the appropriate balance sheet and sustainable returns to our shareholders.”
From January 1, the company will replace its existing geographical reporting structure with four market-based business lines: Oil & Gas, Power, Mining and Environment & Infrastructure (E&I). It is also creating a new ‘Exco’ with 10 direct reports to the CEO, the majority of whom will be in new roles.
The review of has identified multiple long-term opportunities to offset the current headwinds in traditional areas such as offshore greenfield oil & gas and mineable oil sands. More work is required to develop detailed plans on how to deliver their full potential.
The review will mean major job losses and some office closures. The company has identified around 650 surplus roles,offices that can be closed and back-office functions that can be swiftly moved to low cost locations.
“The combined impact of proposed investments and reduction in overheads means we are planning to take an additional £100m permanently out of our annual cost base,” said Lewis.
Agreements in principle have been reached for three assets held for sale, with combined proceeds expected before the year end of around £100m.
The company is in talks to sell the core boiler business and the rest of GPG to separate buyers. It is targeting £500m of disposals by June 2017.
In the nine months to the end of September 2016, revenue was up three per cent at £4.1bn; the order book stood at £6.1bn at the end of September, compared to £6.2bn at the half year.