In its anticipation of an even more challenging environment in the oil and gas industry, Paris-based Technip plans to accelerate its cost reduction and efficiency efforts worldwide through a restructuring plan that includes reducing its workforce by approximately 6,000, equating to about 16% of its workforce.
The company’s restructuring plan targets savings of €830 million, of which €700 million will be delivered in 2016 and the balance in 2017. There are one-off charges of €650 million to cover all the different aspects of Technip’s latest restructuring plan, which was announced on July 6.
The Group will reduce its global workforce by approximately 6,000 and will pursue the streamlining of its activities started last year to focus on its core assets and activities. Technip will reduce (including through sales or closures) its presence in some onshore/offshore markets where profitable business is unlikely even in the medium term; this will involve selected countries in Europe, Asia, and Latin America, including Brazil. However, the company plans to reinforce its investment in key geographic and technology areas where, for example, it has first mover advantage, such as floating liquefied natural gas (FLNG).
Technip’s operational performance for its subsea segment continues to be solid, and the Group confirms the outperformance of this segment in 2015 as compared to initial expectations. The company says that cost reduction will be made in those markets where new project awards are under pressure, as in the North Sea.
Technip also plans to further reduce its fleet. The originally planned reductions in the fleet would have reduced it by two vessels this year, and now the Group intends to take out a further two vessels, one fully owned and one leased, taking the fleet down to 23 vessels from 36 at the end of 2013.
Chairman and CEO Thierry Pilenko commented,“The slowdown in the oil and gas industry is prolonged and harsh. Therefore, we have decided to accelerate our cost reduction and efficiency measures – which I know will have tough consequences for employees across the Group.”
Adding that Technip strives for sustained investment in key technologies and assets, he concluded, “The launch of the plan today, together with our recent initiatives, such as our Forsys Subsea Joint Venture, shows our determination to maintain this strategy.”