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Wood Group chief is looking to make further UK acquisitions

THE chief executive of Wood Group has said the Scottish oil services giant sees opportunities to make further acquisitions in the UK where the company is enjoying what it called robust business.

Bob Keiller, who would not be drawn on the company's attitude to the Scottish independence debate, also highlighted Wood Group's appetite for acquisitions in the shale market in the USA.

He indicated the company would be keen to get involved if a shale industry develops in the UK.

Mr Keiller was speaking after Wood revealed that it achieved a marginal increase in first half earnings amid challenging conditions in some markets.

Wood Group made $243.9 million (£146m) earnings before interest tax and amortisation in the first six months compared with $243.2m in the same period last time.

The engineering division has been impacted by moves by big oil and gas firms to limit spending on new developments.

However, the division that works on existing assets is thriving as firms try to maximise production in areas like the North Sea.

Mr Keiller said Aberdeen-based Wood Group has a good a good cadre of contracts and customers within the North Sea community.

He said the Pyeroy coatings business that Wood acquired last year, in a £30m deal, had achieved good growth.

"Certainly the UK is an area where we see further acquisition opportunities," said Mr Keiller.

Asked if he thought a yes vote in next month's referendum on Scottish independence would be good for the industry, Mr Keiller said: "I'm not going to be drawn on the yes or no position." He added: "We're in a position where whatever the outcome we think our duty is to do whatever we need to do to be successful.

"And we will move accordingly whatever that means but we do think that would take some time to unravel and therefore we will have the time to respond."

Mr Keiller noted that cost pressures were posing challenges for firms operating in the North Sea.

He said the company's recent decision to reduce the rates paid to 1600 self-employed contractors by 10 per cent had been well received by oil and gas firms. Wood Group has not had problems recruiting contractors since.

"You wouldn't expect people to say thank you so much I was waiting on that and wanting it but people had recognised that there had been a period of inflationary increases that couldn't be sustained," said Mr Keiller.

He underlined Wood Group's enthusiasm for the shale market in the US, where the company has expanded through takoevers and has further acquisition opportunities.

On shale in the UK he said: "If there is a viable and sustainable industry there I would think that we would have skills that are relevant to it."

Engineering earnings fell nine per cent in the six months to June, to $109m, from $120m last time out.

The PSN arm, which works on existing kit, increased EBITA by 47 per cent, to $163m, from $111m.

The turbines arm broke even following a weaker than expected performance.

It was reorganised recently.

Wood Group increased its interim dividend by 25 per cent to of 8.9 cents a share, from 7.1 cents last time.

Analysts at Investec said: "Engineering margins are weaker than expected, but EBITA should be supported by recent acquisitions."

Wood Group bought a Norwegian engineering business, Agility Projects, for around £100m in July.

Shares in Wood Group closed up 5 per cent, 37p at 788.5p.

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