The integration of Foster Wheeler is progressing according to plan, and we are encouraged by the initial customer reactions to our new service offering, including the first revenue synergy wins.
In the first four months of the year we have experienced some challenging conditions. We have seen the benefits of our low-risk, multi-market model support our top line performance, and deliver growth in the order book to a new record.
Jan-April unaudited commentary:
In the four months ending April 2015, Scope Revenue was £1,606m (2014: £1,620m), 0.9% lower than last year's pro forma result, and 3.6% lower on a like for like basis.
The order book stood at £6.7bn at the end of April, compared to £6.3bn at the year end. This represents an increase of 6.3% from December.
The Oil & Gas market trends seen in recent months have continued with customers continuing to delay project sanctions for discretionary capital spend, particularly in upstream. Growth in downstream continues, notably in the US and the Middle East.
In Clean Energy, we have seen some project delays in the North American renewables market, whilst in Europe, recent contract wins in the nuclear and transmission and distribution markets have contributed to the growth in the long-term order book. Delays to design and supply contracts within GPG have also impacted our performance in the year to date.
Contracts announced year to date include:
| Customer | Market | Description | Country |
|---|---|---|---|
| SP Energy Networks | Clean Energy | Design, supply and construction of overhead power lines in Scotland | UK |
| Government of Timor-Leste | O&G | Pre-FEED for the proposed Beaço LNG plant | Timor-Leste |
| Anagold Madencilik | Mining | Initial phase reimbursable EPC for the Çopler Gold Mine | Turkey |
| Fusion For Energy | Clean Energy | 7-year contract for development of and delivery of a neutral beam cell remote handling system | France |
| Sellafield | Clean Energy | 10-year contract to supply radioactive waste analysis | UK |
| US Air Force | E&I | Design and construction of specialist facilities | Guam |
| Hyundai | Clean Energy | Design and supply 2x 150MW CFB boilers in Cebu | Philippines |
| NDA | Clean Energy | 4-year decommissioning and research framework contract | UK |
| BP | O&G | 5-year operations and maintenance contract for Forties pipeline system | UK |
| EDF | Clean Energy | 9-year project management contract to UK nuclear fleet | UK |
| Freeport McMorRan | Clean Energy | Design and supply wet flue gas desulphurisation system | USA |
| Orpic | O&G | 3-year technical services contract for refinery and polypropylene facilities | Oman |
| D'Arcinoff | O&G | Engineering and design work for West Texas Renewable and Gas Monetisation project | USA |
| Shenhua Ningxia Coal | O&G | 3-year project management contract at a coal-chemical complex | China |
Ratings update:
On 27 May, we signed our Euro medium term note (EMTN) prospectus, ahead of our planned debt facility refinancing.
The programme has been rated as investment grade by Moody's (Baa3 stable outlook) and Standard & Poors (BBB- stable outlook).
Outlook statement:
For 2015, we expect to see a continuation of recent revenue trends - with growth in downstream and Middle Eastern Oil & Gas markets being offset by tougher conditions elsewhere. As a result of the project delays mentioned above, we now expect the Clean Energy E&C Scope Revenue growth rate to be less than 10% and GPG Scope Revenue to be a similar level compared to last year.
Overall, we now expect pro forma like for like Scope Revenue to be modestly lower in 2015. On current market forecasts, the reversal of the currency headwinds we experienced in 2014 will add approximately £150 million to Scope Revenue.
Our cost saving plans remain on track to deliver approximately £40m of benefits, and an exceptional charge of £50m, in 2015. By 2017 we continue to expect annual benefits of circa £85m ($125m).
Continued customer pricing pressure, particularly in the Oil & Gas market, is expected to generate a further modest reduction in the 2015 Trading Margin, compared to previous guidance.
Taking into account the timing of expected contract close outs and milestone achievements, and the non-recurrence of a favourable contract settlement of $32.5m in GPG in H1 2014, we are expecting Trading Profit to be more second half weighted than in 2014.