John Wood Group (WG.), in common with industry rivals, has been battening down the hatches in response to the continuing slump in energy prices. The engineering group, which has significant exposure to the North Sea oil and gas industry, has undertaken some heavy-duty housekeeping, including canning about a fifth of its workforce over the reported period. Obviously the focus is on paring back costs, and the group’s latest full-year figures suggest that the rationalisation programme is having the desired effect.
The top line remains under pressure as upstream and subsea project deferrals and reduced North Sea volumes weighed on the engineering and production services business units. But bearing in mind the industry-wide challenges, a 19 per cent reduction in gross profits is a largely creditable outcome, particularly as margins are heading in the right direction and the group's cash conversion rate stands at an impressive 119 per cent. The group also managed to reduce net debt to $294m (£209m), a 10 per cent fall from a year ago, which represented an eminently manageable ratio to cash profits of 0.55.
Prior to these figures, JPMorgan Cazenove was predicting adjusted EPS of 63¢ a share for 2016, rising to 68¢ in 2017.
| JOHN WOOD GROUP (WG.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 616p | MARKET VALUE: | £2.33bn | |
| TOUCH: | 616-617p | 12-MONTH HIGH: | 751p | LOW: 524p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 41 | |
| NET ASSET VALUE: | 633¢* | NET DEBT: | 12% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 5.67 | 94.9 | 531 | 13.5 |
| 2012 | 6.12 | 322 | 71.4 | 17.0 |
| 2013 | 5.75 | 347 | 81.4 | 22.0 |
| 2014 | 6.57 | 475 | 87.9 | 27.5 |
| 2015 | 5.00 | 139 | 21.4 | 30.3 |
| % change | -24 | -71 | -76 | +10 |
Ex-div: 7 Apr Payment: 17 May £1 = $1.41. *Includes intangible assets of $2bn, or 529¢ a share. | ||||
