Page last updated at 16:28 GMT, Tuesday, 2 March 2010

John Wood Group's profits plunge 31%

oil worker
John Wood Group provides support services to the oil and gas industry

John Wood Group, a company with a leading role in providing support services to the oil and gas industry, has reported a sharp fall in profits.

The Aberdeen-based employer said it had been "a very difficult year" as it confirmed full year pre-tax profits for 2009 had fallen by 31% to £177m.

Revenue for John Wood Group was also down 6% to £3.3bn.

The drop comes as the firm said it was withdrawing most of its activities in Venezuela.

The company wrote off an exceptional charge of £24m as it sold Vepica, an engineering company in Venezuela, and ended a water injection contract, while losing out through devaluation of the country's currency.

It is now only involved in well support in the South American country's oil fields.

Wood Group's focus on production support, the increasing differentiation of our services, our market-leading position and our good international spread will continue to stand us in good stead in 2010
John Wood Group

The firm - which operates in 50 countries and employs more than 28,000 people - said there was robust performance from its support services in oil and gas production.

However, the volume of business and margins in field development has suffered, partly through gas prices being subdued.

In December, it bought Baker Energy, which made it a market leader in the US Gulf of Mexico, where the market for deepwater activities is expanding.

That also added 500 workers in Africa.

'Remain strong'

Wood Group also bought Shanahan Engineering, a power plant specialist, which operates out of Ireland, Italy, the UK, Turkey and Japan.

Chairman, Sir Ian Wood said the outlook was for lower volumes of work in engineering for the first part of this year, and then recovery towards the end of the year.

Production-related activities, which now represent 56% of the group's revenue, should continue to be robust, he said.

And a "strong balance sheet provides a platform to take advantages of opportunities for further acquisitions and organic investment".

This year, John Wood Group wants to expand engineering in the Middle East, doubling its workforce there to 500, while also boosting activities in Africa and in Asia-Pacific.

In a joint statement with chief executive Allister Langlands, Sir Ian said: "Wood Group's focus on production support, the increasing differentiation of our services, our market-leading position and our good international spread will continue to stand us in good stead in 2010.

"Beyond that we believe the fundamentals for oil and gas services and gas-fired power generation remain strong and we are well positioned to deliver good longer-term growth."



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