Strong performance in the North Sea and engineering operations helped offshore services giants Wood Group post a 14% increase in profits for 2013.
The Aberdeen-based firm said it was now looking to strengthen its upstream operations after spending more than £160million on acquisitions last year.
But the company’s engineering arm warned it expcted the number of significant offshore awards to fall, with subsea and pipeline contract set to be hit by the decline in upstream investment by oil firms over the next year.
Pre-tax profits at the firm were £246million ($412million), up 14% from 2012, with revenues up 3% to £4.2billion ($7.064billion).
Among the strongest divisions of the firm was the engineering arm, which saw revenues and earnings up more than 11% last year, although Wood Group sounded a note of caution over an expected slowdown of contract awards this year.
“Increased focus on capital budgets is evident in the slower pace of significant new offshore awards,” the company said.
“We anticipate growth in subsea & pipeline to be more than offset by a reduction in upstream, where we see good prospects although not of the scale of the significant offshore projects recently completed.
“Overall we see a good long term market for our services but continue to anticipate a reduction in engineering EBITA of around 15% in 2014.”
The company is now looking to exit Oman, where it has been making a loss on the Petroleum Development Oman pipeline engineering and maintenance unit, but is still looking to international growth – particularly with the shale-related operations in the USA following the acquisition of Elkhorn last year.
Revenue dropped 19% at the Wood Group GTS arm, with earnings down 9%, though the company now expects better performance once the joint venture for the gas turbines with Siemens is launched later this year.
“The leadership team and I have considered the group’s strategy, which remains sound and positions us well for the longer term,” said chief executive Bob Keiller.
“We are predominantly an upstream oil and gas services business and our intention is to broaden and deepen the services we can offer in this sector.
“We have reviewed all parts of the group from three perspectives: risk profile, current and future financial performance and strategic fit with the group overall, and this has resulted in a number of actions, including the acquisition of Elkhorn and the joint venture with Siemens.
“Looking to 2014, our mix of opex and capex activities and the contribution of completed acquisitions is expected to lead to growth overall.”
See our full interview with Bob Keiller in tomorrow’s Press and Journal
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