FTSE 250 oil services firm Wood (WG.) disappoints investors with a trading update which essentially amounts to a profit warning for next year. In response the shares are down a hefty 10.4% to 714p.
The relatively-brief statement notes that 2013 will meet expectations and 2014 will still deliver growth once factoring in the contribution from completed acquisitions. However, it adds the troubled engineering division is expected to see a reduction in earnings before interest, tax and amortisation (EBITA) of 15%. The company blames the completion of significant projects and some deterioration in the themes set out alongside its interims in August (20 Aug), principally delays to offshore developments and weakness in its Canadian business.
The news is better in the group's PSN division - which provides field work, training, design and consultancy services to oil and gas companies. Wood highlights strength in the US shale space augmented by the pending £125 million acquisition of Wyoming-based Elkhorn. Essentially PSN is expected to make up for the engineering weakness though a troubled project in Oman - where losses are not improving as quickly as expected - continues to dog the firm.
Wood's other main business unit GTS - which maintains gas turbines and supports the construction of gas-fired power plants - fares less well with the group guiding for lower EBITA this year and a flat performance in 2014.
A number of Wood's peers fall in sympathy with today's statement; Amec (AMEC) is down 2.9% to £10.72 and Petrofac (PFC) off 2.9% to £11.55. This is not the first update from the space to have failed to match up to expectations in 2013 and we will take a look at the prospects for the sector as a whole in next week's issue of Shares, out on 19 December.
