Oil services firm Wood Group saw revenues dip as customers cut back on exploration and production capital expenditure, and braced itself for a deep 15 per cent spending fall throughout 2009. However, the group believes it will benefit from its focus on supporting customers' operating costs (representing around 55 per cent of group revenue) rather than new developments.
Foreign exchange movements also held back reported earnings, with its production facilities and gas turbine services units particularly hard hit as they translated local currency earnings into dollars. But a good performance in subsea and pipeline projects meant engineering and production facilities, the largest division, still grew sales by 1 per cent, despite some project timing uncertainties. But well support saw sales fall sharply, down 14 per cent as expected, reflecting the impact of the weaker US natural gas market on the group's pressure control and logging services businesses.
Expansion in the Middle East, West Africa and Asia Pacific remains on track after a joint venture in Saudi Arabia, but Wood reiterated its cautious outlook given engineering project delays and the effect of lower US drilling activity on well support.
Broker Evolution Securities expects full-year 2009 pre-tax profits of $307m and EPS of 42.5¢ (2008: $384m/52.1¢).
| WOOD GROUP (JOHN) (WG.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 322p | MARKET VALUE: | £1.70bn | |
| TOUCH: | 320-323p | 12-MONTH HIGH: | 479p | LOW: 152p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 232¢* | NET DEBT: | 15% | |
| Half-year to 30 Jun | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2008 | 2.53 | 181 | 23.7 | 2.80 |
| 2009 | 2.41 | 161 | 21.1 | 3.10 |
| % change | -5 | -11 | -11 | +11 |
Ex-div:02 Sep Payment:24 Sep *Includes intangible assets of $617m or 117¢ a share £1=$1.63 | ||||
