Shares in French oil services company Technip SA plummeted Tuesday after it announced a major restructuring plan, including 6,000 job cuts world-wide, as falling energy prices force the company to drastically cut costs.
Technip said in that the restructuring plan was required “in anticipation of an even more challenging environment in oil and gas.”
The company, which provides project management, engineering and construction services for the energy industry, said it hopes to save €830 million ($916.5 million) over the next two years with “a significant part” coming from its onshore and offshore business.
Technip, which also booked a one-time charge of €650 million, said there will be asset sales and closures in some markets “where profitable business is unlikely even in the medium-term, including countries in Europe, Asia and Latin America including Brazil.”
Technip shares fell as much as 10% on Tuesday and were trading down 8.9% at €48.95 at 10:16 GMT. The shares have fallen almost 40% over the past 12 months as declining energy prices have ravaged its profitability.
The firm, which operates in 43 countries, said new projects continue to be deferred as its clients reassess new oil production in the wake of low commodity prices. It also said rivals engaged in “irrational behavior in bidding” on some of the projects and that some project discussions have stopped and that the company has engaged lawyers as it renegotiates other contracts.
“We conclude that these trends have not improved and, in some cases, have actually worsened over the last two months,” the company said.
Many energy companies have seen their earnings slide in the wake of the slide in oil prices and have moved to aggressively cut costs.
By Jason Chow