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John Wood ups the pay rate

RESULTS: John Wood has delivered a better than expected increase in the annual dividend, but project delays remain a stumbling block
February 18, 2014

John Wood (WG.) saw its shares climb 4 per cent on the release of these full-year figures, even though they were in line with consensus. That was undoubtedly a relief for shareholders after December's profit warning - the second in four months. Shareholders also welcomed a better than expected increase in the annual dividend, reflecting the group's intention to boost cash returns.

IC TIP: Hold at 705p

Underlying operating profits were up 16 per cent to $533m (£319m) on a margin of 7.5 per cent, against 6.7 per cent for the previous year. The results benefited from the first full-year contributions from the Duval and Mitchells acquisitions made in 2012, underpinned by continued growth in subsea and pipeline work. However, overall performance suffered due to continuing losses in Oman, while revenues at the maintenance division, John Wood GTS, were down by a fifth. The group has a strategy in place to exit the Gulf state, and it has agreed to form a joint venture comprising certain GTS business units in a bid to improve profitability.

Net debt doubled over the period, with a total of $276m spent on strategic acquisitions, including the purchase of Elkhorn, a provider of construction services for the lucrative US shale market.

JOHN WOOD (WG.)
ORD PRICE:705pMARKET VALUE:£2.6bn
TOUCH:704-705p12-MONTH HIGH:927pLOW: 610p
DIVIDEND YIELD:1.9%PE RATIO:14
NET ASSET VALUE:642¢*NET DEBT:13%

Year to 31 DecTurnover ($bn)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
20094.926532.110.0
20104.112832.411.0
20115.794.953113.5
2012 (restated)6.132271.417.0
20136.434781.422.0
% change+4+8+14+29

Ex-div: 9 Apr

Payment: 20 May

£1=$1.67

*Includes intangible assets of $1.9bn, or 500¢ a share