Wood shares up 8% as order books tops $8bn

Ken Gilmartin

Shares of Aberdeen-based global engineering and consulting giant John Wood Group rose as much as 8% on Thursday after it published a trading update for the six months ended June 30, 2022, showing an order book at May 31 up 18% year-on-year to $8.1 billion.

The Aberdeen firm said it expects a stronger performance in the second half and higher full-year revenue.

Wood said it won several key contract awards including a 10-year partnership with Chevron.

Wood reported first-half revenue of around $3.2 billion “with strong growth in consulting and operations partially offset by a decline in projects” and adjusted EBITDA of around $250 million “with a relatively robust performance in consulting and projects offset by a decline in operations.”

The Aberdeen firm said its net debt of $1.7 billion “reflects a seasonal working capital outflow, the scheduled SFO regulatory payment and costs associated with previously provided loss-making contracts, principally Aegis.”

It said completion of the sale of its Built Environment Consulting business “will transform our balance sheet and restore the financial flexibility to deliver our strategy.”

Wood said: “The net cash proceeds from this sale are expected to be around $1.62 billion after estimated working capital adjustments, tax costs and transaction costs.”

Wood reported first-half operating profit before exceptionals of around $95 million, compared to $86 million in HY21.

In its outlook for the full year, Wood said: “We expect higher revenue in 2022 across our business supported by the continued growth in our order book.

We expect a stronger performance in the second half, helped by an improved performance in our turbines joint ventures and stronger revenue growth, particularly in our projects business.

We expect the sale of Built Environment Consulting to improve our net debt position in the second half.”

Wood’s new CEO Ken Gilmartin said: “It is encouraging to see the improving operational momentum in our business, especially the growth in our projects order book, supported by a backdrop of strong market demand for our engineering solutions.

“While our debt remains high, the sale of the Built Environment consulting business will restore the financial flexibility necessary to deliver our strategy, and we are making good progress towards completion in the second half.

“While we are mindful of the current global macro uncertainty, we have an exciting future in front of us across the global energy market, addressing both security and sustainability.

“We have the people and skills to capture the opportunities ahead and deliver sustainable free cash flow.

“I look forward to saying more on our plans at our half year results, and in detail at a capital markets day in late Q4.”

About the Author

Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.