JOHN Wood Group’s shares plunged 12 per cent in early trading yesterday, after the FTSE 250-listed energy services firm warned that profits from its engineering division would be down around 15 per cent next year.
Wood Group said it expected earnings to decline in its engineering unit – which carries out design work for offshore oil rigs – due to “some deterioration in the themes we set out in our interim report in August, principally project delays offshore together with upstream weakness in Canada”.
But the firm expects to trade in line with expectations this year and forecasts overall growth next year, with a strong performance in its services division Wood Group PSN offsetting the reduction in Wood Group Engineering.
“Wood Group PSN is performing well, with growth led by our US onshore shale related business,” the company said.
“The North Sea remains a strong market – we have secured nine North Sea contract renewals over the last 12 months, providing good revenue visibility and helping maintain our leading position.”
The company forecasts this year’s earnings from its gas turbine division, Wood Group GTS, to be lower than last year.
Wood Group had its share price target cut by Credit Suisse yesterday from 900p to 850p, in the wake of the announcement.
“There is no getting around the fact that Wood Group’s...trading update contains little to provide festive cheer,” David Thomas, analyst at Credit Suisse, said in a note to clients.
The company’s share price recovered slightly by the end of the day, closing down 9.9 per cent.