Amec Gains Most in Eight Years as New CEO Announces Broad Review

(Bloomberg) -- Amec Foster Wheeler Plc gained the most in almost eight years after its recently appointed boss announced a strategic review including efforts to cut costs.

Shares in the energy-services company rose as much as 69.10 pence, or 15 percent, to 535.50 pence a share in London trading, the biggest gain since Oct. 30, 2008.

“The new CEO has given a very strong impression of a new man in charge of the business and ready to make hard changes,” Mark Wilson, analyst at Jefferies Group LLC, said by e-mail. “Challenges remain ahead however.”

Cutting the net debt,  which stood at 1.08 billion pounds ($1.41 billion) as of June 30, is one of Amec's top priorities, Chief Executive Officer Jonathan Lewis said in a presentation. The company expects it to rise to 1.1 billion pounds by year-end compared with previous guidance of 1 billion pounds. The higher forecast is partly due to restructuring costs that will follow the strategic review.

“Many of the key challenges we face today are quite frankly self-inflicted and more importantly they are manageable,” Lewis said during a call with analysts Tuesday. Amec's organization “needs delayering” and its oil and gas unit in the Americas has become too accustomed to higher oil prices, he said.

As part of this review, Lewis said he has appointed Garry Dryburgh, president of the company's Middle East and Africa operations, as chief transformation officer. The results of the review will be announced on Nov. 15. Lewis became CEO on June 1.

Amec posted a revenue of 2.84 billion pounds in the first half, beating the average estimate of 2.58 billion pounds from four analysts surveyed by Bloomberg. The company reiterated plans to sell its Global Power Group in the second half. It expects to raise 500 million pounds selling that unit plus other non-core assets by June 2017.

Amec was the best performer on the 20-member Stoxx Europe 600 Oil and Gas Index Tuesday.

To contact the reporter on this story: Angelina Rascouet in London at arascouet1@bloomberg.net. To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Alex Devine