OREANDA-NEWS. John Wood Group PLC, issues the following pre-close trading update for the six months to 30 June 2016. Results for the first half will be released on 16 August 2016.

Trading performance

We expect financial performance in the first half of 2016 to demonstrate the benefits of: our asset light, predominantly reimbursable business model; our attention to management of utilisation; and significant overhead cost savings from reorganisation, delayering and back office rationalisation. We remain confident that our asset life cycle service offering, specialist technical solutions and geographic footprint position us well in the current environment and for when market conditions recover. Overall the outlook for the full year has not changed and there is no change to EBITA guidance of around 20% down on 2015 as given in May.

Engineering

In Upstream, follow on work continues on Det Norske Ivar Aasen and Hess Stampede and we have commenced the detailed design phase of Peregrino II, which will continue into 2017. We are also continuing work towards detailed design on the Tengichevroil automation scope in Kazakhstan. In June, we were pleased to be selected by Noble Energy to perform the FEED and detailed design work for the Leviathan fixed platform. Looking further ahead, we are seeing some early signs of our customers beginning to assess future projects and we feel well positioned for FEED and detailed design work that may come to market in the US.

In Subsea, we have seen activity on smaller conceptual FEED and consultancy workscopes benefitting from our catalogue of proven designs and solutions as customers look for efficiencies. We remain active on BP Shah Deniz and GWF Phase 2 for Woodside, however there have been limited large subsea capex projects coming to market and we continue to have lower visibility of future projects. Our recent frame and master services agreements with ENI and Statoil add to the agreements with BP signed in 2015 and further demonstrate customer support for our service offering. We have seen good performance from our US onshore pipelines business benefitting from continued activity with Energy Transfer Company and Dow Chemical Company.

In our downstream, process and industrial business, the Flint Hills Resources refinery project is starting to wind down and we see are seeing competitive pressure, specifically in our process plants business.

PSN

In the Americas, relatively robust activity outside onshore US alongside the acquisitions of Infinity and Kelchner at the latter end of 2015 will help offset the impact of pricing and volume pressure in our US onshore business. Although we are not seeing any immediate increase in our operating and maintenance activity, we continue to strive for efficiencies, through reorganisation and centralisation and are confident that we are well positioned for when the market recovers.

In the North Sea, the operating environment remains very challenging for both volume and pricing but we are maintaining our leading position in brownfield operations, maintenance and modifications, having renewed contracts with Chevron, Enquest, Nexen, Shell, Talisman, Taqa and Total. Our recent acquisition of some of the assets of Enterprise Engineering Services Ltd will assist us in working towards further in house and customer efficiencies as we expand our capabilities. Our industrial services business continues to perform well in the defence and industrial markets as well as the oil & gas market.

Performance in our international business has been robust. Work has commenced on our recently announced contracts in Iraq and contract for BP in Baku. We continue to see the Middle East as an area of future growth.

In Turbine Activities, relatively robust performance in RWG has been offset by performance in EthosEnergy.

Cash flow, financing and dividend
Our strong balance sheet and committed long term financing allows us to reinvest in the business through acquisition and organic investment. Our intention remains to increase the dividend per share by a double digit percentage for 2016.