25 June 2015
Trading update for the six months to
June 2015
John Wood Group PLC (“Wood Group” or “the Group”), issues the
following pre-close trading update for the six months to
30 June 2015. Results for the first
half will be released on 18 August
2015.
Trading performance
Financial performance in the first half of 2015 will demonstrate
the relative resilience and flexibility of our asset-light,
predominantly reimbursable model, but will be down on the first
half of 2014 reflecting challenging conditions in oil and gas
markets. To help offset the impact of lower activity and pricing
pressure, we are delivering savings significantly in excess of
original targets from our cost reduction initiatives, and continue
to focus on utilisation. We remain confident that our market
leading businesses and breadth of capability position us well to
deliver for our customers. There is no change to overall guidance
and we continue to anticipate that full year EBITA will be broadly
in line with analyst consensus.1
Engineering
Upstream activity levels remain subdued, however we have seen a
good contribution from larger detailed engineering projects
including Det Norske’s Ivar Aasen in
the Norwegian North Sea and Hess Stampede in the Gulf of Mexico. In the second quarter, we
started FEED work on our six year Offshore Maintain Potential
contract with Saudi Aramco awarded in March. The current high
volume of pre-FEED, FEED and concept work includes a number of
leading global offshore developments and is a positive indicator of
future activity levels, although the timing of sanction of detailed
engineering scopes remains uncertain.
Our subsea business has been active on larger projects for BP in
the Caspian and the North Sea,
Zadco in Abu Dhabi, Tullow in
Ghana and Chevron in Australia. However, activity levels have
reduced and we are seeing fewer large subsea capex projects coming
to market. Recent new awards include FEED for Woodside in
Australia and for Talisman in
Vietnam and a five year
maintenance contract for subsea well control as part of a joint
industry project.
Our onshore pipelines business is performing robustly in the US
where customers are looking to improve transportation to downstream
facilities, and is delivering engineering and construction
management services for customers including Energy Transfer Company
and Dow.
Our downstream, process and industrial activities are also
performing well, in part due to the impact of lower feedstock
prices. Following the successful completion of early stage
engineering on a refinery modification project for Flint Hills
Resources in the Eagle Ford region, we have recently been awarded
the detailed engineering, procurement and construction support
scope.
PSN
In the Americas, the US onshore market continues to be impacted
by reduced demand and pricing pressure in our capex related
activities including fabrication and site preparation and, to a
lesser extent, midstream construction services. Our ongoing opex
focused activity, which accounts for over half our onshore work,
has also experienced pricing pressure and some lower demand but has
been less affected. In May, our Trinidad joint venture was awarded a new five
year $250 million contract to provide
engineering, procurement and construction services to BP’s offshore
facilities.
In the North Sea, we are maintaining our leading position in
maintenance and brownfield engineering work and have good
visibility under longer term contracts. We are seeing the impact of
reduced project and non-essential maintenance work, though continue
to work alongside customers towards efficiency improvement.
Following new five year awards from Total and Enquest, we secured a
new $250 million contract with Antin
Infrastructure Partners for the operatorship of the CATS terminal
and pipeline in the North Sea. The contract was secured in
collaboration with Wood Group Kenny, leveraging our leading
expertise in pipeline operations and extending our duty holder
capability into new markets.
In our international business, longer term contracts in
Australia and Asia Pacific are progressing and we see a
number of near term opportunities for growth in the Middle East and Africa.
In Turbine JVs, underlying performance is in line with 2014 and
our primary focus continues on actions to improve performance in
EthosEnergy including capital efficiency and cost reduction
initiatives.
Financing and dividend
Our strong balance sheet provides security and flexibility, and
net debt is slightly below the lower end of our preferred Net Debt:
EBITDA range of 0.5 times to 1.5 times. Our intention remains to
increase the dividend per share by a double digit percentage from
2015 for the medium term.
Summary
Financial performance in the first half of 2015 will demonstrate
the relative resilience and flexibility of our asset-light
predominantly reimbursable model, but will be down on the first
half of 2014 reflecting challenging market conditions. To help
offset the impact of lower activity and pricing pressure, we are
delivering savings significantly in excess of original targets from
our cost reduction initiatives, and continue to focus on
utilisation. There is no change to overall guidance and we continue
to anticipate that full year EBITA will be broadly in line with
analyst consensus.1
Conference Call
A telephone conference call for analysts will be held at
8am today; participant dial-in
details below:
UK: 01296 480 180
International: +44 1296 480 180
Passcode: 842 406#
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Notes to Editors:
Wood Group is an international energy services company with over
$7bn sales. The Group is built on our
Core Values and has two reporting segments – Wood Group Engineering
and Wood Group PSN - providing a range of
engineering, production support and turbine services to
the oil & gas, and power sectors. www.woodgroup.com
Note 1 – Company compiled publicly available consensus EBITA on
a proportionally consolidated basis is $469m and AEPS is 85.5c, last updated on
1st June 2015.
http://www.woodgroup.com/investors/analyst-consensus/pages/default.aspx
Enquiries:
Wood Group
Andrew
Rose
01224 851 000
Laura McCracken
Carolyn Smith
Brunswick
Patrick Handley
020 7404 5959
Charles Pemberton