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Daily Telegraph: Wood eyes targets as profits jump 64pc

By Russell Hotten, Industry Editor
Last Updated: 12:18am BST 29/08/2007

Oil services group John Wood is looking to make several acquisitions over the next few months after reporting a surge in interim profits yesterday that puts the company on track to beat analysts’ full-year forecasts.

The Aberdeen-based company, whose products include pumps and pipelines for the oil and gas sectors, predicted in March that growth would continue this year, but at a slower pace.

But there was no sign of this as Wood posted a 64pc jump in pre-tax profits to $124m (£61.7m) in the six months to the end of June on increased exploration activity by major customers like Royal Dutch Shell.

Wood has a track record of making bolt-on acquisitions, but there was no such activity in the first half. However, chief executive Allister Langlands said yesterday that Wood had a number of small companies in its sights, both in its traditional £10m-£20m target range and also acquisitions above £50m.

Mr Langlands said: “We are extending our range of products and services, and our international presence.”

The company, the UK’s largest provider of oilfield services, said all of its major businesses were showing good growth, with margins improving across all divisions. This included the gas turbine maintenance operation which, despite being the company’s weak link a couple of years ago, performed strongly in the first half due to increased demand from the power sector. The turbine division almost doubled underlying earnings to $29.2m as Wood landed long-term maintenance deals in the Netherlands, China and the US.

Wood’s best-performing operation was the exploration and production division, where underlying earnings soared 71pc to $97.4m. The business generated half of Wood’s $2bn in revenues.

Mr Langlands said: “Global economic demand is driving increases in running hours on installed equipment and there is a tightening of supply and demand for power in certain markets. These factors are contributing to a clear improvement in demand for our services.”

According to Merrill Lynch analyst Alejandro Demichelis: “Once again, management has raised the bar for the full year. Results were well ahead of our expectations on the back of a solid performance.”

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/29/cnwood129.xml

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