John Wood Group Issues Trading Update

John Wood Group issued pre-close trading update for the year to 31 December 2013. The group has delivered good growth in 2013 and is confident of achieving performance for the year in line with expectations.

In 2014, the mix of opex and capex activities in business and the contribution from completed acquisitions is expected to lead to growth overall.

Wood Group Engineering is on track to deliver EBITA growth in line with previous guidance of 10-15%. In Upstream, the significant Mafumeira Sul and Ichthys projects are beginning to wind down, with substantial completion of scope scheduled around the year end.

Wood Group is active on a number of projects including Anadarko Heidelberg and Hess Stampede in the Gulf of Mexico, and Det Norske’s Ivar Aasen project in the North Sea. In Western Canada, the market remains weak. The company sees good prospects for a number of Upstream awards next year although not of the scale of the significant projects nearing completion. In Subsea & Pipelines, Wood Group sees good subsea activity overall, although there is some slowdown in Australia. Onshore pipelines continues to benefit from healthy US shale market activity. Downstream, process & industrial will deliver an improved performance over 2012. Looking ahead, the completion of significant projects and some deterioration in the themes the company set out in interim report in August, principally project delays offshore together with upstream weakness in Canada, is expected to result in a reduction in Engineering EBITA in 2014 of around 15%.

Wood Group PSN is performing well, with growth led by US onshore shale related business. The North Sea remains a strong market in which the company has secured nine North Sea contract renewals over the last 12 months, providing good revenue visibility and helping maintain leading position. Wood Group is also starting to see the benefit from Pyeroy’s expansion with oil & gas customers. In the Americas, the company has recently completed the acquisition of Elkhorn for a consideration of $215m. Elkhorn is a Wyoming based construction services provider, which will enhance US shale exposure and complement existing construction, maintenance and fabrication activities. In international markets, performance continues to be held back by contract in Oman. Underlying performance has improved in Oman although losses continue at a lower rate, and further actions to address this position are being taken. Overall for 2014 we anticipate good growth, again led by US onshore business.

In Wood Group GTS expects that 2013 EBITA will be lower than 2012, in part due to the impact of lower EBITA in Power Solutions and some recent deferrals in Maintenance. The Dorad contract is on track to complete early in 2014. Completion of joint venture with Siemens is expected in the first half of 2014, at which point all of Wood Group’s gas turbine-related activities will be in joint ventures and will be reported within Wood Group PSN in the future. Performance across the gas turbine joint ventures is expected to be flat for 2014, with growth in Maintenance offset by the impact of a lack of backlog in Power Solutions.

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LNG World News Staff, December 13, 2013; Image: John Wood Group