Shares in Wood Group advanced strongly after investors were impressed with a 14% increase in full-year profits.
The Aberdeen-headquartered energy services firm which has an operational presence in 50 countries worldwide and employs more than 44,000 staff saw revenues increase by 3% to $7.06 billion in the year to December 31.
Pre-tax profits came in at $412.8m for the period, an uplift of $65.7m on the $347.1m achieved a year earlier.
Chief executive officer Bob Keiller said 2013 had been a year of “good growth” and said he expected the company to make further progress in the current financial year.
“In my first full year as CEO, the leadership team and I have considered the group’s strategy, which remains sound and positions us well for the longer term,” said Mr 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.”
The firm’s biggest operational division, Wood Group PSN, saw revenues climb 8.3% to $3.99bn during the year as a result of growth in US-based onshore shale gas operations and a strong pipeline of North Sea contract renewals.
However, performance was tempered by continuing losses from an Omani-based contract which Wood is seeking to exit. The move has led to an exceptional charge of $28m.
The group’s GTS division a provider of rotating equipment services saw revenues plunge 19% to $1.08bn last year after overall performance was hit by deferrals in aero derivative activities.
The firm said its Dorad contract had generated a loss during the year but was expected to be profitable overall following expected completion in the first quarter of this year.
In October, Wood moved to form a joint venture with Siemens’ turbocare business which is expected to deliver $15m of savings within three years.
The firm said the performance of GTS this year is likely to be broadly flat.
The company also said the outlook for its engineering division was poorer, with a 15% reduction in earnings expected in the year ahead as a result of a reduction in upstream work as major long-term projects come to a close.
However, Forfar-born chairman Allister Langlands who will retire following the group’s general meeting in May and be replaced by former SSE chief executive Ian Marchant said he was confident the firm was on the right path, although trading conditions would continue to pose challenges.
“Energy markets generally remained favourable during the year, with analysts typically estimating an increase in E&P (exploration and production) spend of around 10%,” Mr Langlands said
“For 2014, analysts estimate some reduction in that growth rate, reflecting a greater focus on capital budgets by our customers.
“The group continues to have a good balance of opex and capex activities which should help underpin growth in the medium term.”