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LONDON (Alliance News) - Oil services company John Wood Group PLC Thursday retained its guidance for an improved financial performance in 2014, driven by growth in its PSN production services unit and an expected significant improvement in its turbine business in the second half of the year.
In a statement, the company said the PSN Production Services unit continues to deliver strong growth, driven by its performance in the Americas thanks to high-margin US shale work and the benefit of the Elkhorn business it acquired in 2013.
Its North Sea business also remains robust, it said, and is benefitting from service expansion thanks to the acquisition of Pyeroy in 2013. Its international business has been buoyed by the recent award of an engineering, procurement, and construction management contract across Woodside's onshore and offshore assets in Australia, adding to recent multi-year contract awards in Papua New Guinea and Malaysia with ExxonMobil.
John Wood said a lower contribution from upstream activities in its engineering division is being offset by a good performance in subsea and pipelines and downstream.
"There is no change in the slower pace of detailed Upstream offshore engineering awards, although we have seen higher levels of early stage engineering work in 2014 which is an encouraging indicator of future activity. The acquisition of Agility Projects AS was completed on 1 September 2014 adding to our capabilities in the Norwegian greenfield and brownfield market," it said.
The company added that it expects a significant improvement in its turbine business in the second half of the year, although earnings before interest, tax and amortisation will be lower than in 2013 for the year as a whole.
"The expected reduction is primarily related to performance in the Wood Group businesses prior to the creation of EthosEnergy in May, and the impact of project delays in EthosEnergy during the remainder of 2014," it said.
It also expects improved cash generation from operations in the second half of this year, and said its strong balance sheet provides a good platform to drive organic and acquisition-led growth.
"Overall, we continue to anticipate performance in line with expectations and up on 2013, led by growth in PSN Production Services," it said.
The company is holding a capital markets day Thursday.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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