AMEC delivers robust 2009 results
4 Mar 2010
London – AMEC chief executive Samir Brikho has announced “excellent” results in 2009, but warned that the trading environment will remain challenging. His comments accompanied AMEC’s 2009 report, which included details of on-going projects at its key Natural Resources and Power & Process divisions.
“[We] expect that our order pipeline will continue to improve as the year progresses. We are currently well positioned on contracts at the early stages of the project cycle and are confident this will support future growth, building on our strong customer relationships,” said Brikho. “In the first quarter, we have seen signs of a pick up in the market and we expect to win a number of sizeable new contracts for delivery later in 2010 and beyond.”
Natural Resources comprises AMEC’s activities in Oil & Gas services (52% of revenues in 2009), Oil Sands (31% of revenues), and Mining & Metals (17% of revenues). Services are provided in asset development and asset support and include consultancy, design, engineering, procurement, project management, construction management, commissioning and operational support.
Power & Process’s core services are in asset development and asset support, and include consultancy, engineering, design, project management, commissioning and operational support across the life cycle of projects and investments. The unit is focused on five core sectors: Nuclear (34% of 2009 core revenue), Conventional Power (15%), Transmission & Distribution (22%), Renewables (7%), Bioprocess (22%).
Natural Resources
The Natural Resources division achieved “good results” despite a reduction in industry capital spend in 2009. Overall revenue improved 8% to £1,300.9 million as a result of acquisitions and currency movements. Good organic growth was seen in the Oil Sands business, driven by the progress of the Kearl project.
In Oil & Gas services, opex activities declined slightly following the completion of two UK projects in early 2009. New capex contracts in the early phases of development in the second half of 2009 are expected to ramp up later in 2010 and beyond.
2009 was also a good year for longer-term opex contracts, with highlights including: BG: two-year contract extension in the North Sea; BP: engineering and project management services contract in UAE, BP Unity operations and maintenance; Shell: Sigma3 joint venture contract extension; and Woodside Energy: offshore maintenance services.
The division, added AMEC, continued to strengthen its relationship with existing customers (ExxonMobil, Shell, BP, BG, PotashCorp, KOC, Syncrude, Fairfield Energy) and built new ones, such as with INPEX. Meanwhile, it added, international oil companies drive a significant proportion of the business, national oil companies represented 7.5% of the division’s revenues in 2009, growing 23%.
Power & Process
Revenue for the period was down 23%, to £788.1 million in 2009 (2008: £1,021.8 million). Over 40% of this decline reflected the completion of the four ‘older contracts’. These are contracts that do not meet the new criteria of low-risk services with high value add. Further volume decline also came from weaknesses in process.
Contract awards at AMEC’s Power & Process unit in 2009 included:
• Conventional Power: EDF: contract for mechanical, electrical and instrumentation installation at the new West Burton combined cycle gas turbine power station (UK); Gateway Storage Company: FEED contract as mentioned previously
• Transmission & Distribution: National Grid: offshore contract to provide technical due diligence support in their bid to become an offshore transmission operating license owner
• Renewables: Renewable Ventures: solar power project
• Bioprocess: Range Fuels: project management of a prototype biofuels plant; Packaging Corporation of America (PCA): a US$93 million contract for energy efficiency upgrades at its linerboard mill in Valdosta, Georgia, US; and CMPC: Laja plant modernisation project and plant capacity increase Santa Fe, New Mexico, US.
“Markets are expected to remain challenging in 2010,” reported AMEC. “The Sellafield contract is now well established and the division’s focus on five core sectors, which are supported by long term market fundamentals and strong customer relationships, position AMEC well for growth in the longer term.
“Pricing pressure will be mitigated by the on-going positive effects of Operational Excellence. Incremental margin improvements are anticipated as the older contracts move towards completion and the strategic refocusing exercise continues.”
