Market conditions 'recovering'

$700m deal eases profits slump at Wood Group

Robin WatsonWood Group expects profits to slump by 20% this year but sees signs of “modest recovery” in the oil and gas market.

Chief executive Robin Watson, confirming earlier guidance, said the Aberdeen company would be focused on keeping costs under control.

Profit for the half year from continuing operations before tax and $30m of exceptional items, mainly a result of redundancies, fell 38.9% from $156.3 million to $95.5m. Revenue was down 16.5% to $2.6bn.

Pricing pressures were partly offset by cost savings of about $50m and the company is continuing to take out management positions.

The company raised its interim dividend buy 10% to 10.8 cents in line with its intention to increase the dividend per share by a double digit percentage for 2016.

Wood Group also announced it has won a ‘multi-year’ contract worth $700m in Kazakhstan. It will provide optimal integrated process and safety solutions after supporting the project since 2013.

The Aberdeen company is providing main automation contractor services to Tengizchevroil (TCO) for the Future Growth Project-Wellhead Pressure Management Project at the Tengiz Field.

Mr Watson (pictured) said: Performance in the first half of 2016 reflects the balance of a challenging oil and gas market, our continued focus on utilisation and cost management and the benefits of our flexible, asset light model. Our overall outlook for 2016 remains unchanged; with full year EBITA anticipated to be around 20% lower than 2015, in line with previous guidance.

“Looking further ahead, we see early indications of modest recovery in some areas and believe our customer relationships, geographic footprint, strong financial footing and relentless focus on delivering value through our asset life cycle services and specialist technical solutions, position us well.”

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