Wood Group reaps benefits of US shale boom in first half

First-half earnings at energy services provider John Wood Group were flat but slightly better than the market was expecting as the company benefitted from strong activity in the US shale sector.Revenues were up 10% at $3.8bn and total earnings before interest, tax and amortisation (EBITA) was in line with the same period in 2013 at $243.9m and management said they continued to anticipate full year total EBITA will be in line with expectations and up on 2013. Profit from continuing operations on an equity accounting basis before tax and exceptional items climbed 15% to $182.4m and earnings per share of 44.4 cents were almost flat compared to the prior 44.5 cents. While the PSN segment reaped the benefit of the US shale boom, Wood's engineering segment was held back, as expected, by a slowdown in upstream activity that was only partially offset by good performance in subsea and pipelines and downstream. Chief executive Bob Keiller: "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. Looking forward he said: "Overall, the outlook for the group for the year remains unchanged from the position outlined at our December 2013 trading update; we continue to anticipate full year EBITA to be in line with expectations and up on 2013, led by growth in PSN Production Services."Net debt increased sharply from $310m at the end of 2013 to $427m, hit by adverse moves in working capital that the company said was typical seasonal movement, lifting gearing from 13% to 17% at end-June.Broker Investec calculated that revenues were 10% ahead of consensus and EPS was 4% ahead. "Engineering margins are weaker than expected, but EBITA should be supported by recent acquisitions. Despite weak sector sentiment, the upside to our unchanged target price is starting to look more compelling."Shares in Wood Group were up 4.2% to 783p at 09:10 on Tuesday. OH