LONDON (Alliance News) - Oil and gas services company John Wood Group PLC Tuesday reported an increase in profit, following a strong performance from its production services business.
The company posted pretax profit from continuing operations of USD233.3 million for the six months ended June 30, up from USD176.3 million a year earlier. Total profit before tax and exceptional items fell slightly to USD184.1 million from USD186.6 million, while total revenue rose to USD3.80 billion, from USD3.45 billion.
On the back of its performance the company increased its interim dividend 25% to 8.9 cents from 7.1 cents.
FTSE 250-listed John Wood Group said its production services division made the most gains, with revenue up 22% to USD2.34 billion from USD1.91 billion a year earlier. Earnings before interest, taxation and amortisation (EBITA) margin moved up 1.2 basis points to 7.0% from 5.8%.
John Wood Group said this increase is primarily attributable to performance in the Americas, led by typically higher-margin US shale activity, including the benefit of the Elkorn business acquired in December. The company said the Americas is now the largest contributing region to production services EBITA.
John Wood Group said its engineering division also improved, with revenue up 3.8% to USD1.02 billion from USD982.6 million a year earlier. However, EBITA margin fell 1.5 basis points to 10.7% from 12.2%.
The company said a good performance in subsea and pipelines and downstream was more than offset by a lower contribution from upstream, which saw growth in onshore activity but was impacted by a lower contribution from offshore projects and Canada. Overall, the upstream unit represents around 40% of the division's revenue.
John Wood Group said its turbines unit, which provides industrial gas turbine and rotating equipment services to clients in the oil and gas markets, struggled. Total revenue for the unit fell 20% to USD439.8 million from USD550.8 million a year earlier.
The company said the unit was hurt by lower engineering, project and construction activity for Ethos Energy. Ethos Energy is owned 51% by Wood Group and 49% by Germany's Siemens AG.
Aberdeen-based John Wood Group said it continued to augment organic growth with acquisitions.
In the first half, the company acquired Meesters, a specialist fabrication business in the Bakken shale region, Cape Software, a Texas-based training and processing simulation company, and Sunstone, a Calgary-based pipeline consultancy.
Post the period-end John Wood Group acquired Agility Projects AS in Norway for USD164 million.
?We have seen strong performance in our PSN Production Services activities in the US shale market, offset by an anticipated lower contribution from upstream engineering and weaker than expected performance in our turbine activities," Chief Executive Bob Keiller said in a statement.
"Overall, the outlook for the group for the year remains unchanged from the position outlined at our December 2013 trading update," Keiller said. "We continue to anticipate full-year EBITA to be in line with expectations and up on 2013, led by growth in PSN Production Services.?
EBITA came in at USD243.9 million in the recent half, up slightly on USD243.2 million a year before. For all of 2013, EBITA was USD533.0 million.
John Wood Group shares were quoted up 4.3% at 784.00 pence Tuesday morning
By Anthony Tshibangu; anthonytshibangu@alliancenews.com; @AnthonyAllNews
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