The Middle East remains a bright spot for Amec Foster Wheeler’s oil services business, the company reported yesterday, even as margins are squeezed worldwide after last year’s oil price plunge hit capital spending in the sector.
In its first report as a merged entity, following Amec’s US$3.2 billion takeover of Foster Wheeler in November, the company reported that its “scope” revenue – which strips out procurement revenue that is passed through to clients without margin – was 2 per cent higher at £3.9 billion (Dh21.2bn), while trading profit was 6 per cent lower at £321 million.
The company also reported pro forma results of the combined group showing scope revenue hardly changed on the year, at about £5.5bn for 2014, while trading profit was down 15 per cent at £457m, reflecting foreign exchange losses.
Shares in Amec Foster Wheeler fell on the London Stock Exchange in line with a broader market sell-off, and were down 35 pence at 938 pence at midday London time.
As with most companies in the sector, Amec’s shares are down from last year’s peaks after the oil price plunge. However, they have recovered sharply since the beginning of this year, partly because of cost cutting that has eliminated 2,000 jobs. The stock price’s decline of about 15 per cent since last year compares to losses of between 20 and 50 per cent for bigger firms, such as Halliburton, Technip and Saipem. Amec’s chief executive, Samir Brikho, said the group differs from those oil services companies as it is involved more “above ground”, in managing projects for clients, rather than in owning and leasing equipment, such as jack-up rigs.
This has directly benefited the company during the downturn, especially in the Arabian Gulf, he said. “Our job in the region tends to be as project manager or [engineering, procurement, and construction] manager, where we are acting on behalf of a client, like a national oil company, and managing, say, a Korean engineering firm on a project,” said Mr Brikho.
This is important when oil prices were high and cost inflation on projects was running up strongly. But it has remained important even as oil prices slumped.
“Examples recently are a couple of projects in Kuwait where the Kuwaitis were expecting prices to fall because there are fewer projects for companies to bid on,” Mr Brikho said. “But because companies have seen such pressure on their margins, in fact they haven’t been bidding as aggressively. Bids came in 20 per cent higher than what they thought. So, Kuwaiti clients ask us to how to manage these projects on the same budget.”
The company said it has a strong order book in the Middle East – up 17 per cent on an underlying basis – and Mr Brikho said the additional business lines, such as clean energy and the greater geographical spread that the merger has brought will give the company a cushion from the oil downturn.
amcauley@thenational.ae
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If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.
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England Test squad
Ben Stokes (captain), Joe Root, James Anderson, Jonny Bairstow, Stuart Broad, Harry Brook, Zak Crawley, Ben Foakes, Jack Leach, Alex Lees, Craig Overton, Ollie Pope, Matthew Potts
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10pm: Handicap (TB) Dh175,000 2,000m.
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One in nine do not have enough to eat
Created in 1961, the World Food Programme is pledged to fight hunger worldwide as well as providing emergency food assistance in a crisis.
One of the organisation’s goals is the Zero Hunger Pledge, adopted by the international community in 2015 as one of the 17 Sustainable Goals for Sustainable Development, to end world hunger by 2030.
The WFP, a branch of the United Nations, is funded by voluntary donations from governments, businesses and private donations.
Almost two thirds of its operations currently take place in conflict zones, where it is calculated that people are more than three times likely to suffer from malnutrition than in peaceful countries.
It is currently estimated that one in nine people globally do not have enough to eat.
On any one day, the WFP estimates that it has 5,000 lorries, 20 ships and 70 aircraft on the move.
Outside emergencies, the WFP provides school meals to up to 25 million children in 63 countries, while working with communities to improve nutrition. Where possible, it buys supplies from developing countries to cut down transport cost and boost local economies.
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COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
The Specs:
The Specs:
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Transmission: 8-speed automatic
Power: 444bhp
Torque: 600Nm
Price: AED 356,580 incl VAT
On sale: now.
Mercedes-AMG GT 63 S E Performance: the specs
Engine: 4.0-litre twin-turbo V8 plus rear-mounted electric motor
Power: 843hp at N/A rpm
Torque: 1470Nm N/A rpm
Transmission: 9-speed auto
Fuel consumption: 8.6L/100km
On sale: October to December
Price: From Dh875,000 (estimate)