AGM and Interim Management Statement

RNS Number : 3435G

Wood Group (John) PLC

11 May 2011

 



11 May 2011

Annual General Meeting Statement ("AGM") and Interim Management Statement ("IMS")

Refocused Group well positioned for good longer term growth

John Wood Group PLC ("Wood Group"), the international energy services company, issues the following IMS which the Chairman, Sir Ian Wood, will deliver at the AGM, today, 11 May.  A trading update for the six months to 30 June 2011 will be provided on 1 July 2011. 

Overall, the Group has delivered good growth in the first four months of the year and anticipates that the full year performance will be in line with expectations.  Following the acquisition of PSN and disposal of the Well Support division, the refocused Group is set to grow its position as:

·    A world leading engineering business with strong market positions in upstream, subsea and pipelines ("Engineering")

·    The world's leading production facilities support provider ("Wood Group PSN")

·    The world's leading independent industrial gas turbine aftermarket provider ("Gas Turbine Services")

The Group will report under these three segments commencing with the Interim Results announcement on 23 August.  A separate announcement showing historic performance of the above segments from 2006 to 2010 is also released today. 

In Engineering, year to date performance and a strong order book support our expectation of good EBITA growth in 2011. We are seeing increased volumes in our upstream business, although we continue to experience delays in the progression of certain projects. Our subsea and pipeline business continues to perform strongly, most notably in Australia. The downstream, process and industrial market remains soft. We are progressing our expansion into key international markets. In Saudi Arabia, we were awarded a multi-year engineering services framework agreement by Saudi Aramco, which will be supported by the Dar E&C and PI-Consult acquisitions. We also announced the establishment of a joint venture with Sime Darby in Malaysia.

In our Production Facilities business, the North Sea has seen reasonable activity levels and we have extended a number of longer term contracts. Project related activity has been healthy, although we see the potential for projects to be delayed as field economics are reassessed.  In the US we are experiencing strong demand for our onshore services, particularly in the shale regions, together with steady performance offshore in the Gulf of Mexico. In West Africa we continue to execute work under our longer term contracts in Equatorial Guinea, Nigeria and Angola. Performance in Australia and Oman has been impacted by slower than anticipated start up on certain contracts.

We completed the acquisition of PSN on 20 April and PSN is performing in line with expectations. We are making good progress on integrating PSN with Wood Group's Production Facilities business to create Wood Group PSN, the world's leading production facilities support provider.

In Gas Turbine Services, we are benefiting from cost reduction measures and we are seeing an improving outlook for our services in the power market. Demand for oil and gas maintenance activities remains reasonable, however performance has been impacted by test cell downtime and overhaul delays in the Middle East and North Africa. In Power Solutions, work on the Dorad and GWF projects is progressing well and will contribute more significantly to profit in the second half.  We continue to expect a strong recovery in Gas Turbine Services EBITA in 2011.

Well Support performed strongly up to the date of disposal on 26 April.

We continue to monitor events in the Middle East and North Africa and have recently suspended engineering work for a Libyan offshore project where our receivables and work in progress amount to around $20m.

The Group's financial position remains strong and we anticipate good operating cash flow for the year. Following the acquisition of PSN and disposal of the Well Support division, we plan to return cash to shareholders of not less than $1.7bn and an update on this, including the mechanism to be used, will be provided later this month. Following the return of cash, our balance sheet will continue to provide a strong platform for organic and acquisition led growth in key markets.

Overall, the Group has delivered good growth in the first four months of the year and anticipates that the full year performance will be in line with expectations.  The long term fundamentals for oil & gas and gas fired power generation remain strong and we believe the refocused group is well positioned to deliver good longer term growth.    

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Notes to editors:

Wood Group is an international energy services company with $5.5bn revenues, employing around 34,000 people and operating in 50 countries. The Group has three businesses - Engineering, Wood Group PSN and Gas Turbine Services - providing a range of engineering, production support, maintenance management and industrial gas turbine overhaul and repair services to the oil & gas, and power generation industries worldwide.

www.woodgroup.com 

Enquiries:

Wood Group

Nick Gilman / Carolyn Smith                       01224 851 000

Brunswick

Patrick Handley                                           020 7404 5959

Nina Coad

 

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