Wood Group Drops on Lower Engineering Unit Outlook: London MoverNidaa Bakhsh
John Wood Group Plc, a U.K. oil-services provider active in Africa and the Middle East, fell the most in almost two years in London trading after cutting the profit outlook at its engineering division.
The shares slumped 8 percent to 831 pence at the close in London, the biggest drop since October 2011. That gives the company a market value of 3.1 billion pounds ($4.9 billion).
The engineering unit is expected to deliver earnings growth of 10 percent to 15 percent this year, the Aberdeen, Scotland-based company said today. That’s lower than the previous estimate of about 15 percent, reflecting project delays and a weaker market in Canada, it said.
Wood Group said the completion of Mafumeira Sul in Angola and Australia’s Ichthys projects by year-end will pose “challenges to growth in 2014.”
The share-price reaction “reflects a reduction in management’s outlook for growth in its engineering business, both for 2013 and 2014, partly driven by company-specific project phasing and partly driven by deferrals of projects in the Gulf of Mexico,” Katherine Tonks, an analyst at RBC Capital Markets in London, said in an e-mail.
Profit before tax and exceptional items climbed to $186.6 million in the first half compared with $160 million a year earlier, Wood Group said. It raised the dividend by 25 percent to 7.1 cents a share.
The company renewed contracts in the North Sea and had “strong” growth in the U.S. liquid-rich oil shales, it said.
“Activity levels generally remain healthy and we believe the group is well positioned for future growth,” Chief Executive Officer Bob Keiller said in the statement.