Wood shares up 9% on strong trading, deal synergies

Shares of Aberdeen-based oil and engineering giant Wood plc soared 9% on Friday after it reported good trading momentum in the first quarter at its AGM and said its integration of Amec Foster Wheeler was ahead of schedule.

“Our integration programme is ahead of schedule,” said Wood in its AGM statement.

“We expect an in-year benefit from cost synergy delivery of >$50m and an exit run rate of >$80m by the end of the first year post completion …

“We remain confident of delivering annualised run rate cost synergies of at least $170m by the end of the third year following completion …

“We are making good progress on revenue synergies and have secured work on multi-year contracts worth >$300m.

“This includes our contract with Saudi Aramco/SABIC to support their integrated crude oils to chemicals complex and an engineering, procurement & construction, commissioning and operations scope for upstream assets in Trinidad.”

Wood employs 55,000 people and operates in more than 60 countries, and has revenues of roughly $10 billion.

According to Bloomberg data, Wood shares rose 9% to around 639p to give the Aberdeen firm a current stock market value of around £4.3 billion.

On trading performance and outlook, Wood said: “We have seen good trading momentum across our business in the first quarter.

“Performance has been led by Asset Solutions Americas including capital projects activity in power, downstream & chemicals and US shale.

“For 2018, our overall outlook is unchanged.

“We expect to deliver revenue and earnings growth and an in-year benefit from cost synergy delivery of >$50m.

“We are confident of delivering EBITA in line with guidance and market expectations and do not anticipate that 2018 EBITA will include any significant one off items.

“In addition to our typical second half bias, the phasing of cost synergies, projects and market recovery is expected to result in a c60% weighting of earnings to the second half of the year.”

Wood CEO Robin Watson said: “The first quarter has demonstrated the significant benefits of the operational platform we have created.

“Our integration programme is ahead of schedule and we are seeing good momentum in trading, cost and revenue synergy delivery.

“Our overall outlook is unchanged and we are confident of returning to growth in 2018.”