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Wood Group sees revenues and earnings drop as pandemic hits projects division

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Wood Group PLC (LON:WG.) has lost ground after unveiling the effect of COVID-19 on its business.

The engineering and consultancy group said half year revenues were expected to drop 21% to US$3.2bn, with earnings down 12% to US$255mln to $265mln.

It said strong consulting activity and relative resilience in perations partly offset lower activity in projects.

It expects lower activity overall for the full year, but is seeing improving activity levels which should see a stronger second half.

Stuart Lamont, investment manager at Brewin Dolphin, said: “It has been a relatively slow start to the year for Wood, with revenues down around one-fifth on the same period in 2020. The company’s projects division, which represents 40% of sales, has been particularly affected by the pandemic and has seen revenues drop by around 40%.

“With that, debt has stayed above the $1 billion mark, after Wood had previously managed to make significant reductions. Nevertheless, the management team appears to remain confident in the outlook and order book momentum at its operations and consulting divisions looks positive, suggesting the company can get back on track in the second half of the year.”

Meanwhile the shares are down 9.3p or 4.06% at 219.7p.

10.49am: Tristel receives approval for three key products

Tristel PLC (LON:TSTL), which makes infection prevention products, is on the way up after receiving three significant regulatory approvals.

Its foam-based disinfectant for surfaces has received updated approval from the United States Environmental Protection Agency, expanding the product’s efficacy claims to include mycobacteria.

It has appointed Parker Laboratories as its US manufacturing partner and will sell the product through Parker’s nationwide network of distributors on a non-exclusive basis, staring in 2023. Other distribution channels will be put in place ahead of the US launch. 

Its Duo OPH disinfectant – used on ophthalmic instruments including ultrasound devices and lenses that contact the cornea-  has been approved by Health Canada.

Finally the South Korea Ministry of Food and Drug Safety has approved its Tristel Duo ULT product as a high-level disinfectant for ultrasound devices.

It is now seeking approval for Duo ULT from the US FDA.  Worldwide sales of all Duo branded products for medical device disinfection, including Duo ULT and Duo OPH, will exceed £4.3mln in 2021.

Chief executive Paul Swinney said: “Every regulatory approval we achieve represents an important milestone in our progress, and these three approvals are very significant.”

Tristel shares are up 3.96% or 23.74p at 623.74p.

9.27am: First Property Group falls sharply after hefty losses

First Property Group PLC (LON:FPO) has seen its shares subside after a “perfect storm” sent it plunging into the red.

The property fund manager made a pretax loss of £5.09mln in 2020 compared to a £5.52mln profit.

The value ot its directly owned property fell from £56.3mln to £41.57mln.

Unsurprisingly it is not paying a final dividend.

 Chief executive Ben Habib said the property business required “real physical activity” and this had been non-existent during the pandemic.

He said the situation was worse than the 2008 credit crunch.

He said: “Real businesses could perhaps have taken the first full lockdown but we have had varying degrees of lockdown virtually for the entire financial year.

“Consequences of this have been manifold. Many tenants have refused to pay rent and our ability to enforce collection, even from those that could afford to pay, has been substantially neutered by government. Some tenants have gone bankrupt. Rents have fallen across virtually all office and retail sub-sectors. Replacing tenants has been extremely demanding in all cases and impossible in some. As a consequence asset values have dropped.

“In short it has been a perfect storm.”

It has cash in the bank after the £17mln sale of CH8 last year, but the outlook is still uncertain.

He added: “Quantitative Easing will no doubt begin to buoy asset values soon; there are signs of it now, even with income under pressure. But the gravitational pull of economic adversity is going to continue for some time yet.

“We have a number of interesting developments and investments afoot but it will take at least a year, possibly two, for the benefits of these to come through in the numbers.”

The company’s shares are down 21.43% or 7.5p at 27.5p.

8.33am: Vitec Group PLC soars after positive snapshot of orders and profits

Vitec Group PLC (LON:VTC) has broadcast a good share price rise after saying profits would be better than expected.

In an unscheduled update the company, which supplies products ranging from camera systems to mobile power to the likes of broadcasters and gamers, said it ended May with a record order book.

So half year profits are forecast to be not less than £19mln. This compares to £23.5mln in 2019 – pre-pandemic – although that figure included £5.8mln of insurance income.

And despite uncertainty around the impact of electronic component and raw material shortages, it now believes full year profits will be materially above current market expectations of £35.6mln.

There had already been material upgrades following the company’s annual meeting in May, said analyst Tom Fraine at Shore Capital.

He said: “We expect to upgrade our 2021 adjusted pretax profit by around 10% to £39.5mln. We see scope for further upgrades given that the company expects to report at least £19m adjusted pretax profit for the six months ending 30 June 2021, which has been much more heavily impacted by COVID-19 related restrictions than we would expect for the second half…

“We believe there is a good chance this upgrade momentum will continue given that our expected new adjusted [foreast] is still significantly below the £48mln achieved in 2019…

“We believe investing in Vitec represents a good opportunity to benefit from the trend of increasing independent video content creation, which is being driven by TikTok, Netflix, YouTube, Instagram, Disney, Amazon Prime, Apple TV and Facebook. We expect significant increases in funding for independent production companies (e.g. from Great Point, which has been planning to float a £200mln+ film & TV production investment trust) to the benefit of Vitec through sales of premium videographic equipment.

“In the medium-term, we believe Vitec has opportunities to grow earnings through value-enhancing M&A, operational efficiencies and the 4K replacement cycle.”

Its shares are up 13.41% or 165p to 1395p.

Also on the way up is Petards Group PLC (LON:PEG).

Shares in the security and surveillance systems specialist are 3.8% or 0.48p better at 12.98p after a key client took up an option to extend an existing contract.

The extension, won by Petards’ subsidiary RTS Solutions, is worth more than £0.5mln with annual revenues in excess of £0.25mln.

Chairman Raschid Abdullah said: “This award, together with the 3-year renewal of licensing and support agreements for WMS software announced in May, adds to RTS’s order book and provides it with a strong core of recurring revenues for the current and following years.”

 

 

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