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John Wood delivers the goods

RESULTS: Shares in John Wood Group soared 9 per cent in intraday trading on the back of another strong set of financial results
March 5, 2013

The oil and gas engineering sector received a welcome boost after John Wood (GW.) released a strong set of full-year figures - these helped send its shares shooting up 9 per cent in intraday trading. Sector peers Petrofac and Saipem were hit by profit warnings and consensus downgrades last month - perhaps contributing to John Wood's lacklustre share price performance in February. But these results demonstrated that the group has continued to grow earnings and margins - despite the economic downturn and increasing competition.

IC TIP: Buy at 825p

Indeed, cash profit rose 35 per cent in 2012 to $461m (£305m), which demonstrates the resilience of John Wood's business model - where nearly 90 per cent of its contracts are on a reimbursable 'cost-plus' basis. Earnings per share comparisons with the prior year period are skewed, however, due to the disposal of the well support business in 2011. Looking ahead, John Wood expects another strong performance from its engineering division, where earnings are forecast to grow 15 per cent in 2013. Meanwhile, broker Numis Securities expects 12 per cent topline growth in the group's PSN (production services and maintenance) division, largely due to increased activity in the UK North Sea and a maturing US onshore market.

JP Morgan forecasts adjusted EPS of 100¢ for 2013 and 111¢ for 2014 (from 85¢ in 2012).

JOHN WOOD (WG.)

ORD PRICE:825pMARKET VALUE:£3.1bn
TOUCH:824-825p12-MONTH HIGH:884pLOW: 649p
DIVIDEND YIELD:1.4%PE RATIO:17
NET ASSET VALUE:597¢*NET DEBT:7%

Year to 31 DecTurnover ($bn)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
20085.2438449.69.00
20094.9326532.110.0
20104.0912832.411.0
20115.6794.953113.5
20126.8233671.417.0
% change+20+254-87+26

Ex-div: 17 Apr

Payment: 22 May

£1=$1.51

*Includes intangible assets of $1.8bn, or 493¢ a share