Analyst Views | What’s the damage from John Wood’s profit warning?

Suzie Neuwirth

“The firm’s shares had climbed around 19.5 per cent earlier in the year, so in some respects it was not surprising there was a bit of a sell off. But this update was disappointing as there will be a drop in profits for the engineering unit. This is a sector that has had difficulty matching up to other PMIs.

“The company has seen a spectacular rise in its share price over the last few years and the announcement has knocked the shares for six. Sentiment for the company has taken a massive hit today and it will take time for John Wood to recover from this. Brokers will be downgrading the company.

“While we had forecast nine per cent group earnings growth for 2014, it now looks like this will be closer to two to three per cent, equating to a six to seven per cent downgrade. Wood Group is not immune from sector wide project deferrals and joins the list of peers that have warned over the last 12 months.

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