The integration of PSN is on-track after initial problems, and the newly created production facilities support business delivered a 52 per cent rise in trading profit to $153m on revenues up $1bn to $3bn (£1.9bn), The outcome would have been better still if not for losses linked to operations in Colombia and Oman; the latter of which will continue to impact on performance through 2012. Profits were also helped along by improved margins at both the engineering and GTS divisions, which provide a measure of reassurance, given initial concerns that group margins would be constricted in the wake of the PSN acquisition. In fact, overall operating margin from continuing operations moved up from 5.35 to 6 per cent.
Prior to these figures Clarkson/Daniel Stewart anticipated adjusted 2012 EPS of 89.8¢ (2011: 60.2¢).
|JOHN WOOD GROUP (WG.)|
|ORD PRICE:||743p||MARKET VALUE:||£2.8bn|
|TOUCH:||742-745p||12-MONTH HIGH:||775p||LOW: 461p|
|DIVIDEND YIELD:||1.1%||PE RATIO:||2|
|NET ASSET VALUE:||529¢**||NET DEBT:||nil|
In common with many industry peers, John Wood is experiencing difficulties with some of its downstream businesses, particularly those linked to refining in the US, which will hold back group performance in the current year. Still, with an order book accounting for 8 months of revenue, and assuming strong growth from other business segments, the shares trade on a reasonable forward earnings multiple of 13. Hold.
Last IC view: High enough, 537p, 23 August 2011