Pre-close trading update for the year to 31 Dec...
11 December 2014
Pre-close trading updatefor the year to 31 December 2014
John Wood Group PLC ("Wood Group" or "the Group"), issues the following
pre-close trading update for the year to 31 December 2014. Full year results
will be announced on 17 February 2015.
The Group anticipates full year 2014 performance in line with expectations and
up on 2013, with growth in Wood Group PSN Production Services offsetting the
reduction in Wood Group Engineering and Turbine Activities. Operator focus on
efficiency and the recent reduction in the price of oil is leading operators to
re-consider their spending plans for 2015 with a consequential impact on
service company activity. We expect our largely reimbursable order book and
prospects, balance of opex and capex activities, range of longer term
contracts, and spread of business to provide relative resilience in 2015 and we
will see the full year benefit from completed acquisitions.
In Wood Group Engineering the anticipated reduction in 2014 EBITA will be less
than the 15% indicated in December 2013. In Upstream, activity on offshore
projects including Det Norske Ivar Aasen, Hess Stampede and Husky White Rose,
together with onshore work in the US have lessened the impact of the slower
pace of award of significant detailed engineering work. We continue to work on
more early stage projects than in recent years and see this as a good indicator
of future activity. In Subsea & Pipelines, we have seen good activity overall
including work with BP on Shah Deniz and Tullow in Ghana. Onshore US pipelines
activity continues to be strong, driven by shale related infrastructure
development. Downstream, process & industrial has benefitted from the impact of
lower gas prices on refining and chemicals work.
Wood Group PSN Production Services will deliver strong growth in 2014. This
increase is primarily attributable to performance in the Americas, led by US
shale related activity, including the benefit of Elkhorn acquired in 2013. We
continue to provide a range of activities including well site preparation,
infrastructure development and ongoing maintenance across key shale regions for
a broad customer base. The announcement today of the acquisition of Swaggart, a
provider of civil construction and fabrication services to the US oil and gas
and industrial sectors will help extend our service offering. Our North Sea
business has remained robust, benefitting from work performed under long term
operations and maintenance contracts which provide longer term revenue
visibility together with service expansion from the Pyeroy acquisition in 2013.
In December, we were awarded a 5 year contract with an estimated value of
around $750m with BP for the provision of services to upstream and midstream
operations. Internationally, we secured a number of important contracts in 2014
including Woodside in Australia, and ExxonMobil in Papua New Guinea and
Malaysia, and are benefitting from customer-led expansion in Iraq with TAQA and
BP.
Performance in Turbine Activities has improved in the second half although 2014
EBITA will be significantly lower than 2013. Following handover of Dorad
earlier in the year we remain confident of securing change orders, and expect
to recognise the substantial recovery of the first half financial position in
our full year results.
Our balance sheet remains strong and supports our continued investment in
further acquisitions and organic growth. Cash flow generation remains a focus;
in line with the typical seasonal movement, we expect to deliver a significant
improvement in working capital in the second half of the year.
The Group anticipates full year 2014 performance in line with expectations and
up on 2013, with growth in Wood Group PSN Production Services offsetting the
reduction in Wood Group Engineering and Turbine Activities.
Conference Call
A telephone conference call for analysts will be held at 9am today; participant
dial-in details below:
UK: 01296 480 180
International: +44 1296 480 180
Passcode: 615 924#
- ends -
Notes to Editors:
Wood Group is an international energy services company with over $7bn sales. The
Group is built on our Core Values and has two reporting segments - Wood Group
Engineering and Wood Group PSN - providing a range of engineering, production
support and turbine servicesto the oil & gas, and power sectors.
www.woodgroup.com
Enquiries:
Wood Group
Andrew Rose +44 (0)1224 851 000
Carolyn Smith
Brunswick
Patrick Handley +44 (0)20 7404 5959
Rosheeka Field
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