Wood Group forecasts higher core earnings, shares jump

(Reuters) - Oilfield services provider John Wood Group WG.L forecast higher 2019 core earnings on Thursday, with strong performance in its engineering services unit in the Middle East, Asia and the Caspian region offseting slowing U.S. onshore drilling demand.

The company, which provides engineering and technical services to industrial, energy, and utility markets, said it trimmed debt below $1.5 billion (1.15 billion pounds) by the end of the year, down from $1.77 billion at June-end, sending shares 11% higher in early trading.

Aberdeen-headquartered Wood has been working to reduce its debt by selling non-core assets, after its borrowings mounted following its acquisition of smaller rival Amec Foster Wheeler in 2017.

The company, which said in August it would sell its nuclear energy business to Jacob Engineering J.N, now has debt nearly half its market capitalisation.

Wood expects earnings before interest, tax, depreciation and amortisation (EBITDA) between $850 million and $860 million for the year to December, compared with $693.8 million it earned a year earlier

The upper end of the guidance, however, is marginally below a company-compiled consensus of about $864 million.

Revenue for the year is expected to be around $10 billion, down from $11.04 billion in 2018.

Earnings from its Asset Solutions Americas unit, which accounts for about 35% of group revenue, were hurt by cost overruns on certain projects and a slowdown in shale activity in the second half, the company said.

Oilfield services providers have been hit by lower capital spending from oil and gas producers due to price volatility amid concerns of a global slowdown.

Reporting by Shanima A in Bengaluru; Editing by Subhranshu Sahu