Thursday January 8, 12:11 PM
UPDATE 3-Wellstream sees growth in 2009 after solid 2008
By Philip Waller
LONDON, Jan 8 (Reuters) - British oil and gas industry supplier Wellstream Holdings (LSE: WSM.L - news) said on Thursday that business remained buoyant despite falling oil prices, and that it expected results to meet market forecasts in 2008 and 2009.
Wellstream, which makes equipment for oil and gas companies including Petrobras, said revenues grew more than 35 percent last year, though orders on hand had dipped since November.
The group said in a trading statement that the sector's fundamentals continued to be attractive and it was expecting its business to grow, citing a robust balance sheet and strong customer base.
The stock rose 6 percent and analysts said Wellstream had continued to do well despite a broad slowdown in activity in the industry, where slumping oil prices have caused concern that energy explorers may delay or cancel major projects.
In a conference call with analysts, Chief Executive Gordon Chapman said the company expected 2009 earnings to meet consensus market estimates.
Merrill Lynch (NYSE: MER - news) was expecting 2009 adjusted pretax earnings before interest, depreciation and amortisation of 104 million pounds, against 89.8 million pounds in 2008, the broker said in a note.
Wellstream said its order book had shrunk, dipping to about 330 million pounds at the end of 2008 from 350 million in November and 336 million at the end of 2007.
The group had 8-9 months' visibility in terms of order backlog, but customers sometimes tended to award contracts at the last minute, Chapman said.
'Looking at the order backlog generally, it's a very lumpy business and at any one point in time, you can see quite big swings in backlog numbers,' he said.
At 1131 GMT, the shares had recovered early losses of more than 4 percent to stand more than 6 percent higher at 473 pence, outperforming a 0.3 percent rise in the European oil and gas sector.
Analysts at Arden Partners (LSE: ARDN.L - news) said the fall in Wellstream's sales backlog between last November and December reflected wider market uncertainty.
Arden said it was continuing to advise investors to buy the shares. 'Whilst this statement may dampen sentiment in the short term, we continue to believe product-backed companies provide investors with quality earnings streams in what are becoming more challenging markets,' the broker said in a note.
Merrill Lynch, which also has a 'buy' recommendation on the stock, said in a note that Wellstream's upbeat comments about 2009 were 'a clear positive, in our view, considering the uncertainty surrounding the pace of contract awards in the sector.'
(Reporting by Philip Waller; editing by John Stonestreet) Keywords: WELLSTREAM/
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