Aberdeen-based Wood Group today reported strength in the North Sea and US onshore shale gas markets, but warned of problems in Canada and Oman.
In its pre-close trading update for the year, the Group said it had delivered good growth in 2013 and expects further growth in 2014, with growth in Wood Group PSN set to offset the reduction in Wood Group Engineering.
The oil services giant said it had a strong balance sheet and would “continue to pursue organic and acquisition-led growth”.
Wood Group Engineering is on track to deliver a 10-15% growth in operating profits this year, however project delays offshore and upstream weakness in Canada means the company expects a 15% reduction in operating profits in 2014.
The firm is active on a number of upstream projects including the Det Norke’s Ivar Aasen project in the North Sea, and the Anadarko Heidelberg and Hess Stampede in the Gulf Sea. However, the company said the Western Canada market remains weak.
In the subsea & pipelines division, the company warned of a slowdown in the Australian market, but said the onshore pipeline division was benefiting from “healthy US shale market activity”.
Wood Group PSN is reported to be performing well, with growth driven by the firm’s US onshore shale related business.
The firm said the recent acquisition of Wyoming-based construction services provider Elkhorn for £131 million would enhance its US Shale exposure and complementing existing construction, maintenance and fabrication activities.
In the North Sea, PSN said nine contract renewals over the past 12 months would provide good revenue visibility and help maintain its leading position in the market.
The company said performance continued to be held back by its contract in Oman and further actions to address the problem were being undertaken.
Wood Group GTS operating profits for 2013 are set to be lower than 2012 due to lower operating profits in the power solutions division and recent deferrals in the maintenance arm.
The company said it expected completion of its joint venture with Siemens in the first half of 2014, at which point all of Wood Group’s gas turbine-related work will be in joint ventures and reported within Wood Group PSN.
Wood Group also confirmed that Neil Smith is to retire from the board at the end of this year. Mr Smith has been a non-executive director since 2004, and served on the remuneration and nomination committees.
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