By Mamidipudi Soumithri
(Reuters) - British oil and gas services company Amec Foster Wheeler Plc halved its dividend and forecast lower margins in the second half of the year as depressed oil prices force customers to rein in spending.
The company, which said it would consider exiting some markets, lost about a quarter of its market value in morning trading on Thursday. Its London-listed stock was at its lowest in six-and-a-half years.
Amec said it would recommend a final 2015 dividend of 14.2 pence, half the amount it paid a year earlier.
With oil prices set to remain "lower for even longer", Chief Financial Officer Ian McHoul said the company would have been unable to generate enough cash to cover its previous dividend.
"We would have to borrow to cover the (previous) dividend each year," he told Reuters. "That is unsustainable."
McHoul said he expected the dividend cut to save Amec about 85 million pounds ($131 million) a year.
Like other oil equipment and services companies, Amec has been hit by a drop in spending from customers, which have tightened their purse strings to cope with oil prices that have more than halved from their 2014 peak.
Hunting (L:HTG) Plc this week forecast a sharp fall in profit from continuing operations, while engineering firm Weir Group (L:WEIR) Plc said it would cut 400 more jobs.
Europe's oil majors have reduced 2015 spending programmes by about 15 percent to near $107 billion, and more cuts are seen next year.
Amec said on Thursday that it expected second-half margins to be lower than in the first half of the year.
The company also raised its cost-savings target by $55 million to $180 million by 2017, having identified additional savings from general expenses and support functions.
The company added that it was "reviewing low-growth parts of our business with a view to driving an underlying improvement or an exit of those positions".
McHoul declined to identify which businesses or markets were under review.
Amec reported pro-forma scope revenue - which excludes some procurement charges - of 3.87 billion pounds for the nine months ended Sept. 30. This was 1.8 percent less than a year earlier.
The company's shares were down 24 percent at 566.86 pence at 1215 GMT, on track for their biggest ever one-day decline. Earlier, they hit 550 pence, their lowest since April 2009.