Trouble in the North Sea? Wood Group Announces Job Cuts

By City A.M - Mar 21, 2024

• Wood Group is laying off 200 employees, mostly in Aberdeen, Scotland.
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• The job cuts come despite a slight increase in revenue and profits for the first half of 2023.
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• The company is likely responding to a failed takeover attempt and a windfall tax imposed by the UK government.

UK oil major Wood Group is set to cut hundreds of jobs as it prepares to release its 2023 annual results, reports suggest.

According to Sky News, the London-listed oil major is eyeing up the axeing of 200 positions from its 36,000-strong employee base.

The firm employs roughly 6,500 in the UK, the majority of whom are based in Aberdeen.

The news comes nearly a year after a rumoured £1.7bn takeover by private equity giant Apollo Management was culled, with the investment group saying that it would make no further offers.

The news wiped 35 per cent off Wood Group’s share price and it still lingers around 32 per cent lower than its position before the announcement.

It is due to report full-year earnings for 2023 next week.

The Scottish engineering giant generated £2.2bn ($2.9bn) in revenue over the first six months of the period – up around 15 per cent year-on-year – and profits before tax of of £149m ($195m), which is a six per cent boost over the same trading period for 2022.

The group is one of the embattled group of UK-based oil majors that will have to continue to weather the battering taken from the government’s windfall tax.

Chancellor Jeremy Hunt extended the profits levy by another year in his Spring Budget speech and even told morning TV stations the day after that it was fair to classify the oil and gas sector as the Budget’s “losers”.

Wood’s North Sea compatriot Harbour Energy, whose chief executive has damned the windfall tax and its effect on energy companies in the past, said earlier this month that its 2023 revenue fell 31 per cent from $5.4bn (£4.2bn) to $3.7bn (£2.9bn).

Harbour’s profit before tax fell 75 per cent to $597m (£468.5m), with a post-tax profit of $32m (£25.1m), up from $8m (£6.2m) in 2022.

Wood Group was approached for comment.