Contract losses hit Wood Group

Shares in oilfield support services giant Wood Group dropped after the firm admitted international performance for the year ended 31 December will be below expectations.

The fall comes as a result of losses on two Wood Group Production Facilities contracts, which the firm was keen to emphasise have been targeted for an improved performance in 2012.

Overall, the group expects to deliver good growth, with performance for the year in line with expectations.

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"Conditions in oil & gas markets remain strong, with commodity prices at favourable levels for our customers. We are not witnessing any material change in customer behaviour as a consequence of volatility in financial markets, and we remain confident in the longer term prospects for oil & gas and gas fired power generation," the group said in a statement.

In Engineering, the firm continued to see good growth and said its order book remains strong.

In upstream, a number of contracts are active, including the Chevron Jack/St Malo, Hess Tioga and Noble Alen projects, in addition to Anadarko Lucius awarded in the second half.

Subsea & Pipelines continues to perform well while in downstream, the market remains soft and performance has remained in line with the previous year.

In Wood Group PSN, integration is progressing well with demand for activities remaining strong in the North Sea.

In GTS, Maintenance activities are expected to deliver an improved second half performance, despite relatively weak conditions in the power sector, while Power Solutions has made good progress on the Dorad and GWF contracts, resulting in a "meaningful" second half profit contribution, the firm added.

The share price dropped 3.14% to 616p by 08:15.

NR