17th Feb 2015 10:35
LONDON (Alliance News) - Shares in John Wood Group PLC rose on Tuesday after it increased its dividend for the full year and said it intends to increase the dividend further from 2015 onwards.
The good news for shareholders came as the oil-services company reported a rise in earnings, profit and revenue in 2014,
John Wood shares were up 8.4% to 683.16 pence per share on Tuesday morning.
For the year ended December 31, John Wood reported a 3.1% rise in earnings before interest, tax and amortization of USD549.6 million, from USD533.0 million in 2013. The rise was caused by increased revenue and by the company's production services unit providing 30% year-on-year growth in EBITA in 2014.
John Wood said the improved EBITA was a result of operators focusing on improving efficiencies following the fall of the oil price during the second half of 2014 and its acquisitions during the year, which gave it more exposure in "areas of growth" such as the US onshore market, it said.
Profit from continuing operations, before tax and exceptional items, rose by 11% to USD414.5 million from USD373.7 million a year earlier.
As a result, John Wood increased its total dividend for 2014 to 27.5 cents per share, a 25% increase from the 22.0 cents per share paid in 2013. The company said it still intends to "increase US dollar dividend per share from 2015 onwards by double digit percentage."
John Wood reported a 7.8% rise in revenue to USD7.61 billion in the year ended December 31, compared to USD7.06 billion in the same period in 2013.
John Wood's production services unit provided "strong" EBITA growth of 30% in 2014 to USD341.7 million from USD262.1 million, driven by its performance in US shale and growth in the UK North Sea, including achieving a high level of contract renewals which is providing "good visibility into 2015 and beyond", said the company.
In 2015, the company said the production services unit would focus on production-related activity and reducing operators' operating expenditures to provide "relative resilience in a more challenging market" caused by lower oil prices, and said it has identified areas of growth in the Middle East, Africa and Australasia and in the US shale market.
"Overall, the results reflect strong growth in Wood Group PSN Production Services more than offsetting the anticipated reduction in Wood Group Engineering and weaker performance in Turbine Activities," said the company.
The company's engineering unit contributed less from its upstream activities in 2014 than in 2013 "as anticipated", whilst its turbine activities business provided a reduction in EBITA, said John Wood.
John Wood said it is confident that the longer-term market for its engineering unit remains strong and said its turbine business should show some signs of recovery in 2015 through its joint ventures, said John Wood.
"The group performed well in 2014, delivering in line with expectations against a backdrop of a steep decline in oil price towards the end of the year," said Chairman Ian Marchant.
"In line with our focus on customer efficiency, we are also implementing internal cost and efficiency measures to ensure we remain competitive. We will remain a reimbursable, asset-light business with a balance of operating expenditure and capital expenditure activities, a broad range of longer term contracts, and significant customer and geographic diversification," Marchant added.
In 2015, John Wood said it will focus on efficiency, with the aim of achieving cost reductions and deferrals over USD30 million in comparison to 2014. The company reduced its net debt to USD295.7 million at the end of 2014, from the USD416.4 million average throughout the year. John Wood said the current level of debt was "around the lower end" of its preferred range, it said.
"Alongside this, we will continue to look to make value-adding acquisitions that are consistent with our strategy but will apply tougher filters on these acquisitions reflecting the macro environment," said John Wood.
"We will continue to be directed by our core values. We will focus on helping customers increase productivity and efficiency in new projects and existing operations and extend asset lives," said the company.
By Joshua Warner; [email protected]; @JoshAlliance
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