Wood orders top $7bn, but shares hit amid slower Q1

Shares of Aberdeen-based global engineering group Wood plc fell about 6% on Thursday after it published an AGM trading statement saying its first quarter “was slower than anticipated” but its order book was up 9% year-to-date to $7.1 billion.

Wood employs 40,000 people in 60 countries.

In a challenging market affected by Covid-19, the first quarter was slower than anticipated but with improving momentum, and was down on Q1 2020 which was largely unaffected by the pandemic,” said Wood.

“Compared to Q1 2020 relatively robust activity in Consulting, driven by strength in the built environment, was partly offset by lower activity in Projects as large EPC contracts roll off, and lower activity in Operations, particularly in conventional energy due to the impacts of Covid-19 and oil price volatility.

“On a like for like basis, excluding the impact of disposals completed in Q1 2020, EBITDA margins have remained relatively robust.

“Our focus on maintaining high utilisation, the successful delivery of efficiencies from the optimisation of our operating model under our Future Fit programme and improving project execution are largely offsetting the impact of lower activity.

“Our overall outlook for 2021 of lower activity remains unchanged.

“We expect increased activity in Consulting driven by continued strength in built environment activity.

“Lower activity in Projects will be driven by larger contracts in process & chemicals rolling off and new awards in process & chemicals and conventional energy being limited to smaller, early stage scopes, offset in part by resilience in renewables.

“Strength in Operations will be driven by a recovery in demand in conventional energy and growth in process & chemicals, which is supported by improving momentum in order book.”

Wood CEO Robin Watson said: “In Q1 we are seeing continued momentum in order book, which is up 9% year-to-date.

“While the year has started slower than anticipated, margins have remained relatively robust, benefitting from efficiency initiatives and improved project execution largely offsetting the impact of lower activity.

“Our outlook for 2021 is unchanged: increased Consulting activity and strength in Operations, supported by an improving order book, are expected to partly offset lower Projects activity.

“The successful delivery of our Future Fit programme and an increased proportion of higher margin Consulting revenues will deliver a full year margin improvement.