Wood Group Profits Jump by 48%

Wood Group is a market leader in engineering design, production support and industrial gas turbine services for customers in the oil & gas and power generation industries around the world. Operating in 46 countries, Wood Group's businesses employ 28,800 people.

2008 Financial Highlights

  • Revenue of $5,243.1m (2007: $4,432.7m) up 18%
  • EBITA2 of $441.0m (2007: $318.4m) up 39%
  • Profit before tax of $384.1m (2007: $259.9m) up 48%
  • Basic earnings per ordinary share of 49.6 cents (2007: 33.0 cents) up 50%
  • Adjusted diluted earnings per ordinary share3 of 52.1 cents (2007: 36.9 cents) up 41%
  • Proposed full year dividend of 9.0 cents (2007: 7.0 cents) up 29%, reflecting the strength of the Group's performance and confidence in future prospects
  • Significant cash generated from operations; strong balance sheet; bank facilities extended to 2012

2008 Operating Highlights

  • Strong EBITA growth across all three divisions
  • Engineering & Production Facilities -- up 47%
  • Well Support -- up 21%
  • Gas Turbine Services -- up 13%
  • Group EBITA margin of 8.4% (2007: 7.2%), with margin improvement in all three divisions
  • Engineering & Production Facilities - strong revenue and EBITA growth; margin improvement in both Engineering and in Production Facilities

Engineering

  • High activity across all business areas
  • Expanded our range of services and geographic footprint
  • Completed strategic acquisition in subsea (MCS)

Production Facilities

  • Reinforced market leading position in the North Sea; significant contract wins with new entrants
  • Continuing to make good progress in international markets completed strategic acquisition in training (M&O)
  • Well Support -- good revenue and EBITA growth in all businesses; new products and services

Electric Submersible Pumps

  • Delivering margin improvement
  • Continuing international expansion

Pressure Control

  • Expansion of business outside the US with IOCs and NOCs
  • Increased capacity in lower cost manufacturing centres
  • Gas Turbine Services -- strong EBITA growth, good increase in underlying revenue; continuing focus on cost reduction and efficiency leading to improving margins
  • Oil & gas -- activity supports existing production with lower sensitivity to oil & gas prices; increasing NOC content
  • Power & industrial -- demand driven by ongoing maintenance budgets of customers; activity and enquiry levels remain good
  • Fast track power packages -- demand driven by power shortages in developed and developing world; enquiry levels remain good but financing delaying projects
  • Increased order book during the year

Outlook

  • Current market conditions provide challenges and opportunities; working with customers on cost reduction and efficiency improvements to meet the challenge of lower commodity prices
  • The Group is experienced in managing cycles; has a flexible cost base; management action being taken where necessary
  • Strong order book in Engineering & Production Facilities; significant prospects in Engineering; Production Facilities is operating expenditure 'opex' focused, with around 70% of revenue under longer term reimbursable contracts with large stable customers
  • Challenging outlook for US gas market within Well Support; decisive management action already taken to address
  • Anticipate a resilient aftermarket performance from Gas Turbine Services in 2009
  • Strong balance sheet; bank facilities extended to 2012; well positioned to take advantage of acquisition and organic investment opportunities

Sir Ian Wood, Chairman, Wood Group, said, "2008 was a very successful year for Wood Group with record revenue and EBITA. Looking into 2009, Wood Group's strong order book, focus on production support, our good international spread and our high quality customer base all stand us in good stead in these more challenging markets. The current market provides opportunities as well as challenges and we are focused on delivering innovative and creative solutions to achieve cost reduction and efficiency improvements for our customers. Longer term, we believe the fundamentals for oil & gas services remain strong and we are well positioned to capitalize on our high
differentiation and market leading positions to deliver good growth."

Outlook

Wood Group's strong order book, our focus on production support, our good international spread and our high quality customer base all stand us in good stead in these more challenging markets. The current market provides opportunities as well as challenges and we are focused on delivering innovative and creative solutions to achieve cost reduction and efficiency improvements for our customers. Longer term, we believe the fundamentals for oil & gas services remain strong and we are well positioned to capitalise on our high differentiation and market leading positions to deliver good growth.
 

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