Shares in Wood Group (LSE: WG) fell 10% in early trade this morning, following weaker-than-expected half-time results from the six months ending 30 June 2013.
Investors were disappointed in the oil and gas services company’s announcement that its business in Western Canada, which represents just over 5% of divisional revenue, has weakened further. Wood Group does not expect this business to recover during 2014, prompting the dive in share price.
Elsewhere, the firm saw growth in EBITA of 18.6% in the first half, and anticipates full-year performance in line with expectations. Profit before tax and exceptional items rose 16.6%, to $186.6m from $160m at H1 2012.
Shareholders saw a sizeable increase in the interim dividend, which lifted by 24.6% to 7.1 cents from 5.7 cents for the first of 2012, following a 19% jump in adjusted earnings per share to 44.5 cents.
Chief executive officer Bob Keiller commented:
“We have achieved good growth in the first half and remain confident of achieving full year performance in line with expectations. In March, I talked about our focus on increasing collaboration across Wood Group; this is progressing well and we have already seen new business opportunities driven by people working more closely together. Activity levels generally remain healthy and we believe the Group is well positioned for future growth.”
Today’s fallback looks likely to intrigue some contrarian investors, with the shares having broken the 900p barrier last week. Whether you think these are just short-term worries for the engineering group that are outweighed by its long-term potential, though, is up to you, of course.
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> Sam does not own shares in Wood Group.
