Amec Cuts Sales Forecast on Weaker Exploration

Amec Plc, a British engineering and project management firm, cut its revenue growth forecast for this year as customers cut back on oil and gas exploration.

Amec's shares fell as much as 3.3 percent after it reported a 30 percent fall in first-half profit as a stronger pound overshadowed an increase in orders.

The company said it expects a "modest" growth in underlying revenue in 2014. It had earlier forecast "good" underlying revenue growth.

"The general guidance is that ... (underlying revenue growth) is going to be 'lowish' single digits as opposed to 'highish' single digits," Chief Financial Officer Ian McHoul told Reuters on Thursday.

Amec, which mainly serves the oil and gas industry, said lower exploration in key markets such as the North Sea was partially offsetting the strong growth in the clean energy and Middle East oil and gas markets.

The company's underlying revenue, which excludes currency fluctuations and other one-offs, grew 4 percent in the first six months of the year. Underlying revenue grew 2 percent last year.

But, overall revenue fell 7 percent to 1.86 billion pounds ($3.13 billion) in the six months to June 30, as currency changes reduced 160 million pounds from revenue.

The pound gained 3.3 percent against the U.S. dollar and 3.7 percent against the euro in the same period.

Amec's pretax profit fell to 83 million pounds from 118 million pounds.

McHoul said while Amec's underlying margins were stable, they were likely to fall modestly as the company got more contracts from lower-margin businesses such as clean energy.

Clean energy is the company's fastest growing business. Amec also operates in the mining, nuclear power and infrastructure sectors.

About 60 percent of Amec's revenue comes from the Americas and nearly 30 percent from Europe. However, McHoul said regions other than these two were the stronger parts of the business.

The company bought Swiss rival Foster Wheeler AG (FWLT) earlier this year to expand in Latin America and the Middle East, and enter the U.S. midstream market.

Amec said on Thursday the closing of the deal was pushed back to the early part of the fourth quarter from the end of the third quarter.

The group's order book fell to 4.2 billion pounds at June 30 from 3.9 billion pounds a year earlier.

The company's shares were up 0.5 percent at 1094 pence at 1248 GMT. They earlier were down as much as 3.3 percent, making them one of the biggest losers on the FTSE-250 Midcap Index.

Reporting by Abhiram Nandakumar