Wood Group poised to show rise in profits

ENERGY services firm Wood Group is expected to put rivals in the shade when it reports strong growth in profits this week.

The Aberdeen-based company has enjoyed a string a of contract wins and extensions and will also feel the benefits of its strategic acquisition in the US shale gas sector. However, investors still have some concerns about the group’s GTS gas turbine maintenance business.

Chief executive Bob Keiller, who took charge in November in the management shake-up that marked the retirement of long-standing chairman Sir Ian Wood, is seeking greater cohesion within the firm.

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At the firm’s last full-year results, he said he wanted the group’s three divisions to work more closely together to improve cross-selling of contracts, and the interims will give him a chance to update the market on the strategy’s progress.

Keith Morris, an analyst at Investec, said: “Wood Group has performed well in the first half of 2013 with strong demand for its services in engineering, and operations and maintenance.

“The apparent low-risk business model has contrasted sharply with the misfortune of some of its E&C [engineering and construction] peers.

“However, Wood Group’s GTS business remains an underperformer and we would like to see positive progress here before we become more positive.”

Morris also hopes for an explanation on the recent buyout of Pyeroy Group, a contractor that worked on the Forth Bridge refurbishment which he considers to be a low-margin business.

Investec is forecasting first-half revenue growth of 6 per cent for Wood Group, to around £3.5 billion.

That should push profits 18 per cent higher on the Ebita measurement, at £245 million.

As well as organic growth, Tuesday’s figures will show the benefit of Wood Group’s £85m acquisition of Mitchell’s Oil Field Services, which significantly increases its presence in the US Bakken shale region of Montana and North Dakota.

Wood Group, which employs 43,000 people in 50 countries, said recently that GTS has seen an upturn in activity after a sluggish first quarter.

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