FMC, which concentrates on mainly offshore energy, revealed it would be reducing costs in preparation for its merger with Technip at the beginning of next year. Maryann Seaman, CFO at FMC Technologies, said that the company’s unexpected profitability during the third quarter was due in part to its “aggressive restructuring.” FMC stated that the third-quarter eliminations included almost 175 positions in the Houston area.
“With headcount, we’ve been very aggressive and, as you’ve seen, we’ve got more to go,” said Seaman. The offshore sector is estimated to flounder through 2017 and beyond. FMC specializes in equipment manufacturing in the subsea sector.
Over the past two years, FMC has eliminated nearly 5,200 employees, over 25 percent of its total staff. FMC’s current workforce tallies to 14,500 workers which is 1,000 less than the number reported less than three months ago.
In the third quarter, FMC reported a $32 million net profit, surprising analysts who didn’t foresee a profit of any kind. The number is considerably less than the $82 million profit gained for the same period in 2015, but it’s more than the $2.2 million profit FMC reported in the second quarter of 2016.
Doug Pferdehirt, FMC CEO, attributed the increase in profits to cost-cutting. Additionally, FMC is making structural changes to operations to increase efficiency. Pferdehirt said, “We have used this downturn as a catalyst to make fundamental changes to our business model that will continue to provide sustainable benefits.”
Following the merger of FMC and Technip, Pferdehirt will become the CEO of the merged company, TechnipFMC. In May, the two companies settled on a $13 billion merger that is estimated to close by early 2017. TechnipFMC will hold headquarters in Houston, London, and Paris.
According to Pferdehirt, 2017 will see “more challenging operating results.” He said that the simplification of products and services coupled with increased industry standardization are generating additional savings that will push more offshore projects forward. “These are not just talking points,” said Pferdehirt, “We are making it real today.”
Pferdehirt said that when the merger is complete, TechnipFMC will provide construction, integrated engineering, and technology needs for all major offshore developments. In the meantime, FMC will continue business as usual complete with the scheduled job cuts.
BREAKING: On Thursday, it was announced that FMC Technologies will pay a penalty of $2.5 million in a settlement regarding exaggerated profits, said U.S. regulators. According to a statement issued by the U.S. Securities and Exchange Commission, two execs made adjustments improperly after being coerced into enhancing the economic performance of FMC’s energy infrastructure division. The two executives in question complied with the SEC’S ruling without admitting or denying the allegations.