Wood Group spots reasons to be cheerful despite forecast drop of 20% in profits

Offshore energy engineering services provider Wood Group has highlighted spots of silver lining in a generally cloudy six month trading update, in which it forecasts a 20% fall in half year profits.

The Aberdeen-based company said that in the North Sea, the operating environment remains ‘very challenging for both volume and pricing’ but we are maintaining our leading position in brownfield operations, maintenance and modifications, having renewed contracts with Chevron, Enquest, Nexen, Shell, Talisman, Taqa and Total.  

A spokesman added: “Our recent acquisition of some of the assets of Enterprise Engineering Services will assist us in working towards further in house and customer efficiencies as we expand our capabilities.  Our industrial services business continues to perform well in the defence and industrial markets as well as the oil & gas market. 

“Performance in our international business has been robust.  Work has commenced on our recently announced contracts in Iraq and contract for BP in Baku.  We continue to see the Middle East as an area of future growth. 

“In Turbine Activities, relatively robust performance in RWG has been offset by performance in EthosEnergy.

“Our strong balance sheet and committed long term financing allows us to reinvest in the business through acquisition and organic investment.  Our intention remains to increase the dividend per share by a double digit percentage for 2016.

“We expect financial performance in the first half of 2016 to demonstrate the benefits of: our asset light, predominantly reimbursable business model; our attention to management of utilisation; and significant overhead cost savings from reorganisation, de-layering and back-office rationalisation. 

“The current environment remains challenging. However we are encouraged by the recent Upstream awards and feel well positioned for future activity in brownfield maintenance and US onshore.  

Overall the outlook for the full year has not changed and there is no change to EBITA guidance of around 20% down on 2015 as we said in May.”