Pre-close trading update
15 December 2011
John Wood Group PLC ("Wood Group")
Pre-close trading update
Wood Group, the international energy services company, issues the following
pre-close trading update for the year to 31 December 2011. Full year results
for the year will be announced on 6 March 2012.
Overall, the Group expects to deliver good growth, with performance for the
year in line with expectations.
Conditions in oil & gas markets remain strong, with commodity prices at
favourable levels for our customers. We are not witnessing any material change
in customer behaviour as a consequence of volatility in financial markets, and
we remain confident in the longer term prospects for oil & gas and gas fired
power generation.
In Engineering, we have continued to see good growth and our order book remains
strong. In upstream, we are active on a number of contracts, including the
Chevron Jack/St Malo, Hess Tioga and Noble Alen projects, in addition to
Anadarko Lucius awarded in the second half. Subsea & Pipelines continues to
perform well, notably in the UK and in Australia where a recent important
deepwater project was secured for Hess. In downstream, the market remains soft
and performance has remained in line with the previous year.
In Wood Group PSN, integration is progressing well. Demand for our activities
remains strong in the North Sea, where we recently extended our operations &
maintenance and engineering modifications contracts with Talisman. In North
America, we have seen good activity levels offshore Gulf of Mexico and in the
onshore market, driven by strong activity in the shale regions.
Internationally, we continue to be active in a large number of markets,
including Brunei, Kazakhstan, Nigeria and Russia, where we extended our
contract with Sakhalin Energy. Performance in the second half will, however, be
below expectations due to losses on two Wood Group Production Facilities
contracts; a continuing slower than expected start up in our significant
contract with Petroleum Development Oman ("PDO") and forecast losses on a
downstream project in Colombia. Action has been taken to improve performance in
both these areas in 2012.
In GTS, our Maintenance activities are expected to deliver an improved second
half performance, despite relatively weak conditions in the power sector. We
have taken steps to develop our long term maintenance service offering,
including the formation of a strategic alliance with Pratt & Whitney Power
Systems to service the GE Frame 7FA turbine aftermarket. In Power Solutions,
good progress on the Dorad and GWF contracts has resulted in a meaningful
second half profit contribution and these contracts continue to provide good
visibility into 2012 and 2013.
Our full year results will include a significant net exceptional gain of over
$2bn. This reflects the gain on sale of the Well Support division, net of
certain charges including those related to acquisitions, disposals,
integration, restructuring and political disruption.
Our robust balance sheet and anticipated strong second half cash flow provide a
good platform for the Group's future development.
Overall, performance for 2011 is anticipated to be in line with expectations,
with Engineering and GTS ahead of expectations and Wood Group PSN behind
expectations. We anticipate good growth in all divisions in 2012 and remain
confident in the longer term fundamentals for oil & gas and gas fired power
generation and the prospects for the Group's market leading services.
Conference Call
A telephone conference call for analysts will be held at 10am today;
participant dial-in details below:
UK : 0844 800 3850
International : +44 844 800 3850
Passcode : 364 598
(Note: Participants from a limited number of international locations who
experience problems accessing the call using the numbers above should dial +44
207 762 6301).
- ends -
Notes to editors:
Wood Group is an international energy services company with $5.5bn sales,
employing more than 38,000 people and operating in 50 countries. The Group has
three businesses - Engineering, Wood Group PSN and GTS - providing a range of
engineering, production support, maintenance management and industrial gas
turbine overhaul and repair services to the oil & gas, and power generation
industries worldwide.
www.woodgroup.com
Enquiries:
Wood Group
Nick Gilman/Andrew Rose + 44 (0) 1224 851 000
Brunswick
Patrick Handley + 44 (0) 20 7404 5959
Nina Coad
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