London - The British energy services company John Wood Group warned that a weakening Canadian business and project delays elsewhere would impact earnings growth for the rest of this year and into 2014.
Wood Group has been a strong performer to date in the oil and gas services sector, while others have suffered from project delays. Delivering first half profit growth on Tuesday that was broadly in line with analysts' expectations, chief executive Bob Keiller said the group was “not immune” to the trend. Its shares fell 5.8 percent in early trade, making it the top faller among European oil stocks.
It has suffered project delays in the Gulf of Mexico, and said “our business in Western Canada, which represents just over five percent of divisional revenue, has weakened further and we do not expect it to recover during 2014”.
Wood Group downgraded its EBITA profit growth outlook for the division to 10-15 percent from 15 percent previously and said there were “challenges to growth in 2014”.
Wood Group's engineering division accounts for about half the company's profits. It provides subsea equipment and pipelines and also does well integrity and corrosion management work.
Group-wide earnings before interest tax and amortisation (EBITA) was $243.2-million, up 18.6 percent from a year earlier, driven by a strong performance in its oilfield services arm, PSN, and in its engineering division, which together account for over three quarters of its business.
Keiller said the company was making good progress increasing collaboration across the group's three divisions: engineering, PSN, and gas turbines.
“Activity levels generally remain healthy and we believe the group is well positioned for future growth,” he said.
The company raised its interim dividend by 24.6 percent to 7.1 cents. - Reuters