Following June's comprehensive pre-close update, it was no surprise that half-year figures from John Wood (WG.) were in line with brokers' forecasts. But the Aberdeen-based engineer's decision to bump up its half-year dividend by a quarter on the back of continued expansion in the US shale market is nonetheless notable. The benefits of a cost-cutting programme are gradually starting to accrue, with operating profits up by a third to $242m (£146m).
There was a mixed showing across the group's various business segments. Trading profits at Wood Group Engineering were down on the 2013 interim due to a more meagre margin. John Wood continues to gain remits in subsea and pipeline work, but a reduced proportion of higher-margin offshore work hit profitability.
However, both sales and profits surged ahead at Wood Group PSN as work supporting North America's burgeoning shale industry gathered momentum. The numbers were boosted by last year's acquisition of Elkhorn Holdings, a Wyoming-based service provider to the shale market. Management revealed that over $500m in revenues have been generated by US shale-related activities so far this year - and that figure is set to grow rapidly. Meanwhile, the PSN unit has cut costs in the North Sea business, including a 10 per cent reduction in day rates for contract workers.
Broker Investec Securities expects adjusted EPS of 104¢ this year, rising to 111¢ in 2015.
| JOHN WOOD (WG.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 785p | MARKET VALUE: | £2.9bn | |
| TOUCH: | 785-787p | 12-MONTH HIGH: | 905p | LOW: 610p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 680¢* | NET DEBT: | 17% | |
| Half-year to 30 June | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2013 (restated) | 2.8 | 176 | 43.5 | 7.1 |
| 2014 | 3.2 | 233 | 38.5 | 8.9 |
| % change | +16 | +32 | -11 | +25 |
Ex-div: 27 Aug Payment: 25 Sep £1 =$1.66 *Includes intangible assets of $1.9bn, or 507¢ a share | ||||
