John Wood profits restrained by setbacks
Oil and gas engineer John Wood Group today said it was confident of resuming “acceptable” growth next year after half-year profits slumped.
The Scotland-based firm, which builds and maintains offshore oil and natural gas installations and power-generating turbines, said a fall in pre-tax profits to $11.7m (€9.7m) from $58m (€47.9m) was in line with expectations.
It came as the group confirmed it had won an extension of a major North Sea contract with BP, worth up to £135m (€111.6m) over three years.
Although delays in engineering contracts and challenging US power markets forced John Wood’s profits down in the six months to June 30, the group said action to reduce costs and improve efficiency was well under way.
It said it was not relying on a short-term recovery of the US power market and had taken steps such as rationalising facilities and reducing staff numbers.
Chairman and chief executive Sir Ian Wood said: “Decisive management action, our robust development plans and our positioning in fundamentally strong markets give the board confidence that we will resume acceptable growth in 2005.”
He said an anticipated pick-up in engineering contracts, as well as continuing growth in the well support division, should contribute to this.
John Wood employs more than 13,000 people in 34 countries and works with oil giants BP and Shell on projects in the North Sea. It has a gas turbine joint venture with Rolls-Royce which opened two new turbine repair facilities in Aberdeen last year.
Under its extended deal with BP, the group will provide engineering, modification and maintenance services east and west of Shetland, in the central North Sea and at the onshore Sullom Voe Terminal in Shetland. It marked the extension of a contract first signed five years ago.
