A Dundee-based firm has made redundancies, imposed pay cuts and reduced working hours after a decline in work.
Augean has axed more than a third of the workforce on its North Sea Services (NSS) division after Covid-19 and the oil price slump hit “heavily impacted” sales.
The Yorkshire-headquartered firm has premises at the Port of Dundee and was responsible for bringing the first major decommissioning project to Dundee.
Augean provided specialised industrial cleaning to the Curlew floating production vessel, which was docked at Dundee for more than a year.
It said the Curlew project, which had 200 people on site at one stage, had helped boost sales in the first half of the year but it expected a second half decline.
The firm said: “There have been reductions across the Board in NSS which has seen the headcount broadly half and Dundee has seen slightly higher than this pending the award of a further significant decommissioning project of which we do not currently expect in 2020”.
The company said its North Sea division had sales growth of 14% to £15.6 million due to the Curlew project in the six months to the end of June.
“Adjusted operating profit increased to £1.7m (2019: £0.9m) due to revenue increase, better mix and the impact of decommissioning in the North Sea,” the firm said.
“Following completion of the Curlew decommissioning contract in the second quarter, and with significantly reduced volumes as a result of the decline of oil service related activities, NSS is expected to be only marginally profitable in the second half.
“In response to this decline in profitability, headcount has been reduced by approximately one third, with pay reductions as well as a shorter working week having been instigated.”
The Curlew left Dundee in July after cleaning to be dismantled in Norway. The Port of Dundee has subsequently started discussions with the Scottish Environment Protection Agency about obtaining a licence to break up ships.
The listed company said it had remained fully operational at all its sites this year but Covid-19 has impacted several business arms – including radioactive, biomass EfW and construction which were all placed on hold due to lockdown restrictions.
The firm added: “The North Sea service business has been heavily impacted both by the Covid-19 effect on activity levels as well as an unprecedented significant decline in the oil price as a result of Covid-19.
“The first quarter generated more than two thirds of the half year profits with the second quarter heavily impacted by Covid-19.
“Trading in the third quarter has picked up significantly over the second quarter.”
The interim results show revenues of £41.4m in the first half of this year against £44.2m in the same period last year. Pre-tax profits for the six months were £8.5m compared to £9.6m last year.
Last month the assets of the Haliburton Ecocentre in Peterhead were acquired at a “significant discount” for £1.4m with a payment of £300,000 deferred until August 2021.
Jim Meredith, executive chairman, said: “The group has delivered a robust performance across all areas of the business despite significant headwinds in quarter two.
“We are working hard to recoup the impact of the lower oil price and Covid-19 over the second half and, assuming no further Covid-19 lockdowns, we anticipate that full year results will be broadly in line with market expectations.
“The group’s performance in difficult circumstances (Covid-19 and oil price reduction) demonstrated the resilience of our current portfolio of activities and so maintaining our growth profile.”
rmclaren@thecourier.co.uk
