Dril-Quip has seen its revenues and profits dive as operators continued to defer spending last year, and the US services company forecasts "very challenging year" ahead.

The Houston-based manufacturer reported revenues of $538.7 million, compared to $844.3 million for the same period in 2015.

Net profit last year fell as well to $93.2 million, compared with a net profit of $192 million a year earlier.

The results for the 12 months period were "favourably impacted by an after-tax foreign exchange gain", but hit by impairments following the acquisition of downhole specialist TIW Corporation.

In addition, the company announced that its backlog at the end of December was $318 million, compared to $685 million at the end of 2015.

"Our disappointing fourth quarter results were primarily driven by revenue shortfalls in each of our major operating regions as operators continued to defer spending in the face of difficult market conditions," Dril-Quip's chief executive Blake DeBerry said.

"(This year) will be a very challenging year for us and for the entire offshore sector. Accordingly, our diminished backlog will limit our manufacturing flexibility and will require an even higher level of execution in order for us to meet our revenue targets," DeBerry said.

Starting in the new year, Dril-Quip further reduced its employee headcount in the first quarter, but no figures were revealed.

"The first quarter of 2017 is expected to be our most challenging quarter of the year with the impact of severance costs and only benefiting from a partial quarter of pay reductions.

"However, we do expect to be net income and free cash flow positive during 2017, allowing us to continue to execute our long-term strategies," the company said.

Dril-Quip added: "Due to our reduced backlog level and the uncertainty of book-and-ship order volumes, we do not believe that it would be prudent to provide 2017 earnings-per-share guidance at this time."

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