TOP NEWS: John Wood Resilient As Amec Foster Deal Cost Leads To Loss

20th Mar 2018 08:45

LONDON (Alliance News) - John Wood Group PLC said Tuesday it swung to a loss for 2017 due to costs related to its acquisition of oil-field services peer Amec Foster Wheeler, as performance was resilient despite continued challenges in its core oil and gas markets.

John Wood, which provides services to the energy industry, posted a reported pretax loss of USD21.6 million in 2017 after a profit of USD66.0 million in 2016.

Stripping out exceptional items of USD184.5 million, mainly related to the Amec Foster takeover, pretax profit still fell to USD162.9 million from USD220.3 million.

Revenue from continuing operations in 2017 increased to USD5.39 million from USD4.12 million. Total revenue increased 25% to USD6.17 billion, though revenue on a pro forma basis fell 12% to USD9.88 million, a figure which excludes the results of disposed businesses.

Total 2017 earnings before interest, tax, and amortisation rose 2.5% year-on-year on a reported basis to USD372.0 million, and on a pro forma basis fell 11% to USD598.0 million.

John Wood proposed a final dividend of 23.30 US cents per share, taking the total for 2017 to 34.30 cents, up 3.0% year-on-year.

The company completed the all-share GBP2.20 billion takeover of oil and gas services firm Amec Foster in October. John Wood said integration and synergies delivery is ahead of schedule, and it remains "very confident" of reached USD170.0 million of synergies within three years of completing the acquisition.

Looking ahead, John Wood said it expects "modest" Ebita growth in 2018 as the core oil and gas market recovers and the benefits of cost synergies are realised. Further, it said, it has had good momentum in contract awards over the second half of 2017.

Longer term financial objectives include reduce the net debt to earnings before interest, tax, depreciation, and amortisation ratio to below 1.5x within 18 months and to retain its "progressive" dividend policy.

Ebita in the Asset Solutions Americas business for 2017 fell 10% on a reported basis to USD158.0 million, with revenue up 13% to USD2.39 billion. In Asset Solutions Europe, Africa, Asia, & Australia Ebita decreased 2.1% to USD140.0 million and revenue climbed 12% to USD2.62 billion.

John Wood's Specialist Technical Solutions business posted Ebita of USD82.0 million, up 3.8% year-on-year, and revenue of USD756.0 million, up by 55% on 2016. In Environment & Infrastructure Solutions, Ebita was USD25.0 million and revenue USD321.0 million, with this division joining as part of Amec Foster, so there is no 2016 comparable.

Chief Executive Robin Watson commented: "2017 was a year of transformational strategic development. The acquisition of Amec Foster Wheeler in October brought together two businesses and three brands to create Wood, a global leader in project, engineering and technical services delivery."

"We are a broader business with multi-sector, full service capability across energy and industrial markets and a stronger, more balanced offering in oil & gas. Integration is progressing ahead of schedule with initial cost synergies achieved earlier than plan. Financial performance for 2017 is in line with guidance," he added.

John Wood shares were down 0.9% early on Tuesday at 635.40 pence each.

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