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UK's Wood Plc eyes bigger merger synergies after first half results

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UK's Wood Plc eyes bigger merger synergies after first half results

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(Reuters) - Oilfield services company Wood Plc <WG.L> posted first-half profit at the higher end of its forecast on Tuesday while raising its cost-savings target for the integration of a smaller rival it bought last year by $40 million (31.37 million pounds)to $210 million.

Shares of the company were up 4 percent in morning trading, topping the FTSE midcap index <.FTMC>.

Wood Plc, which bought rival Amec Foster last year, has been seeing early signs of recovery in its core oil and gas market after crude prices tripled from 2016 lows.

The company, which operates in more than 50 countries, expects to see further momentum in activity including growth in international oil and gas production spending.

Wood stuck to its full-year forecast and said it was on track to deliver earnings before interest, tax and amortisation (EBITA) growth in line with market expectations.

Order book stood at about $10.6 billion as of June 30, with about 85 percent of 2018 revenue delivered or secured.

However, first-half EBITA dipped slightly to $260 million from $264 million a year earlier on a pro forma basis as margins dropped 0.8 percentage points to 4.8 percent.

The company did not give figures factoring out the impact of the merger with Amec Foster for other measures of profit.

Revenue rose 13.4 percent to $5.38 billion as demand for its oilfield services and products picked up due to higher spending by oil producers after a prolonged crude price slump.

The company posted a loss of $52 million for the first half, compared with a profit of $6 million a year earlier, hurt by a non-cash amortisation charge of $125 million and exceptional costs of $101 million.

(Reporting by Muvija M and Arathy S Nair in Bengaluru; editing by Patrick Graham)

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