Shares of Aberdeen-based global engineering group Wood plc rose about 5% on Tuesday after it published half year results for the six months ended June 30, 2020, that came in “at the upper end of guidance” despite volatility in oil prices and the impact of Covid-19.
Wood said it had seen “relative resilience” in two thirds of its revenue stream which is derived from chemicals and downstream, renewables and built environment markets.
Nonetheless, Wood said it will not pay an interim dividend, a move that follows the withdrawal of its 2019 final dividend in April.
First-half revenue was $4.1 billion, down 14.7% — and down 11.5% on a like for like basis.
Wood, which has been shedding non-core assets to cut its debt, said its net debt excluding leases was cut by 31% to $1.22 billion by June 30.
Wood employs more than 50,000 people in more than 60 countries.
Wood’s first-half adjusted earnings before interest, tax, depreciation and amortization (EBITDA) fell 20.6% to $305 million, at the upper end of the company’s forecast.
The company’s order book at June 30 was down 16.4% to $7 billion.
Wood plc shares, which have lost half of their value in the past 12 months, rose about 5% to about 223p to give the firm a current stock market value of around £1.5 billion.
On its dividend , Wood said: “Uncertainty around the impact of Covid-19 and volatility in oil prices continues and our focus on balance sheet strength remains.
“As a result, the board considers it prudent not to pay a 2020 interim dividend.
“The board recognises the importance of dividends to shareholders and is committed to reviewing the future policy once there is greater clarity on the impact of Covid-19 and recent significant levels of oil price volatility.”
Wood plc CEO Robin Watson said: “In the first half of 2020, we took early and decisive actions in response to the unprecedented impact of Covid-19 on the global economy and oil price volatility.
“Focusing first on the safety of our people, we took action to reduce cost, protect margins & cashflow and ensure balance sheet strength, while delivering for customers.
“We are benefitting from our broader market exposure and have seen relative resilience in two thirds of our revenue which is derived from chemicals & downstream, renewables and built environment markets.
“We have successfully protected margins, and delivered trading performance at the upper end of guidance while reducing net debt as a result of portfolio optimisation and steps taken to protect cashflow.
“Our objectives are to maintain full year margins in line with 2019 and deliver strong cashflow to further reduce debt in the second half.”