Trading update for the six months to June 2014
26 June 2014
Trading update for the six months to June 2014
John Wood Group PLC ("Wood Group" or "the Group"), issues the following
pre-close trading update for the six months to 30 June 2014. Results for the
first half will be released on 19 August 2014.
Trading performance
Performance for the year to date is ahead of expectations in Wood Group PSN -
Production Services and in line with expectations in Wood Group Engineering,
however we are behind expectations in Turbine Activities. We continue to
anticipate full year EBITA to be in line with expectations, and up on 2013.
Wood Group Engineering
In Upstream, market activity continues to be impacted by client focus on
capital efficiency. We are engaged in a number of concept, pre-FEED and FEED
engineering projects, which we have confidence will unlock value for our
clients, and are an important indicator of future prospects. We continue to be
active on SMOE Ivar Aasen in the North Sea, Hess Stampede and Anadarko
Heidelberg in the Gulf of Mexico, and Husky White Rose in Eastern Canada. We
expect to secure further early stage opportunities during the remainder of
2014.
Good activity in Europe, the Middle East, Africa and the Caspian has
contributed to growth in our subsea business, although in other markets we have
seen some impact from the completion of existing projects. Onshore pipelines
continues to perform well in the US, as a result of continued strength in shale
activity.
Downstream is benefitting from brownfield work in US refining and some
greenfield activity in the chemicals market.
Wood Group PSN
Production Services1
Growth in the first half has been led by performance in the Americas,
principally in the US shale regions where we invested further in our
fabrication and training capabilities and now have over 5,000 personnel. We
have seen good organic growth in US shale, together with a significant
contribution from Elkhorn, which was acquired in 2013.
Underlying performance in the North Sea remains strong in an environment where
operators are increasing their focus on efficiency. We are benefitting from
significant contract renewals secured over the last 18 months, and are active
in pursuing further opportunities.
Our managed exit in Oman is moving forward and we expect to exit the contract
fully during 2015. We have commenced work for ExxonMobil in Papua New Guinea
and expect activity to increase in the second half of the year.
Turbine Activities2
Financial performance in Turbine Joint Ventures is behind plan. This includes
the impact of deferrals together with slower activity in certain areas.
EthosEnergy, our joint venture with Siemens, completed on 6 May. Overall for
Turbine Joint Ventures we expect some improvement in performance in the second
half although not to the level originally anticipated.
The Dorad contract sits outside of our Turbine Joint Ventures. Customer
handover was achieved in the second half of May. Overall, the contract is
profitable, although delayed customer handover contributed to a year to date
loss. We are currently engaged with the customer around a number of change
orders and continue to anticipate the position will be largely recovered during
the remainder of 2014.
Financing
We have signed an agreement to issue $375m of unsecured senior notes in the US
private placement market with drawdown in August and November 2014. These will
be at a mix of 7, 10 and 12 year maturities at an average fixed rate of 3.74%.
This gives us a diversified source of funding, extends the maturity profile of
our debt and results in a greater proportion of fixed rate debt finance at
favourable rates.
Summary
Performance for the year to date is ahead of expectations in Wood Group PSN -
Production Services and in line with expectations in Wood Group Engineering,
however we are behind expectations in Turbine Activities. For 2014, we
anticipate a change to the mix of EBITA with an improvement in WGPSN Production
Services being offset by a reduction in Turbine Activities. Overall, we
continue to anticipate full year EBITA to be in line with expectations, and up
on 2013.
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: 664 810
- ends -
Notes to Editors:
Wood Group is an international energy services company with over$7bn sales. The
Group isbuilt 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
Note 1 - Production Services includes all of the activities reported in Wood
Group PSN in 2013; brownfield engineering and modifications, production
enhancement, operations and maintenance, training, maintenance management and
abandonment services.
Note 2 - Turbine Activities are now represented by three joint ventures
("Turbine Joint Ventures"): Rolls Wood Group, TransCanada Turbines and
EthosEnergy, the recently completed joint venture with Siemens; and the Dorad
contract. Results for Turbine Activities will be presented separately at the
time of our half year results.
Note 3 - As indicatedon 18 February, though IFRS11 requires the adoption of
equity accounting for joint venturesin the statutory accounts, the Group will
retain proportional consolidation accounting treatment for management and
segmental reporting.
Enquiries:
Wood Group
Andrew Rose 01224 851 000
Carolyn Smith
Brunswick
Patrick Handley 020 7404 5959
Nina Coad
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