John Wood Group Powers Forward

LONDON -- John Wood Group (LSE: WG  ) saw its shares rise 7.2% to 812 pence this morning following a well-received set of results.

Wood Group is an engineering business focused on the energy sector, and it is still seeing activity bounce back a little from the financial crisis. Its sales rose by 20% to $6.8 billion in 2012, but underlying profit growth was much higher at 43%.

All three of the company's divisions saw growth last year, but the largest increase came from Wood Group Engineering, which provides services to the upstream, subsea and pipelines, downstream and industrial, and clean-energy sectors. This division's profit margins are twice those of the other two parts of the business, so this helped Wood Group's overall profit margin rise from 6% to 6.8%.

The annual dividend was raised by 26% to $0.17 per share, though Wood Group currently pays less than a quarter of its profit out to shareholders. Net debt rose from $4 million last year to $155 million, mostly due to spending on acquisitions.

Wood Group has reshuffled its management team in the past year, with Sir Ian Wood departing as chairman and the previous CEO, Allister Langlands, taking his place. The current CEO, Bob Keiller, was previously head of Wood Group's PSN division.

This company is certainly benefiting from industry tailwinds at the moment. It reckons global spending on oil exploration and production rose 9% last year, and a further 7% increase is expected in 2013. Shale gas production in the U.S. is a key driver, as is the increased complexity of finding and developing new oil fields.

Looking ahead, Wood Group is valued at about 13 times forecast profit for this year, although these figures may be revised after these latest results. At 3 billion pounds, Wood Group is one of the smaller companies in the FTSE 100 right now, but it looks set to progress in the years ahead.

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