The chief executive of John Wood Group, the Aberdeen-based global engineering and consulting giant, admitted in the firm’s 2022 results announcement on Tuesday that “… we have not delivered for our shareholders in recent years.”
Wood, one of Scotland’s biggest companies, is facing a potential takeover from US private equity firm Apollo Global Management — but Wood made no mention of Apollo in its results.
Wood CEO Ken Gilmartin’s admission came as Wood reported that 2022 revenue rose 4% to $5.4 billion and adjusted EBITDA was $385 million, at the top end of guidance.
The firm reported impairment of goodwill and intangibles of $542 million, contributing to an operating loss of $568 million.
Wood reported an order book of $6 billion, up 4% at constant currency, and headcount up 8% to more than 35,500 people.
Wood, which operates in more than 60 countries, has seen its share price fall more than 60% over the past five years. Its stock fell about 3% on Tuesday to around £1.95 to give it a current stock market value of just under £1.4 billion.
The deadline by which Apollo is required to announce a firm intention to make a takeover offer for Wood has been extended to April 19.
On March 7, Wood said it received a fourth takeover proposal from Apollo — this time pitched at £2.37 per share.
“The board believes this latest proposal continues to undervalue the group and is therefore minded to reject,” said the Aberdeen firm on March 7.
On Tuesday, Wood said it is currently evaluating its portfolio and has identified underperforming businesses “that do not fit with our focused strategy, generate negative margin and represent around 4% of revenue … We are considering options in respect of these businesses.”
On dividends, Wood said: “No decision has been taken to resume the dividend and this will be kept under review by the directors. Any decision to resume payment of a dividend will consider the group’s future profitability and cash requirements.”
In the results announcement, Wood CEO Gilmartin said: “Wood is built on strong foundations, from our outstanding technical expertise and people, to our long-term client relationships. However, we have not delivered for our shareholders in recent years.
“While part of that underperformance reflects the challenging market backdrop of lower customer investment and the Covid pandemic, it was also driven by company-specific issues including insufficient discipline in project selection, high levels of restructuring and a series of legacy issues arising from the acquisition of Amec Foster Wheeler in 2017.
“We tackled these issues head-on in 2022 and launched a new chapter for the group with the transformative sale of Built Environment Consulting, reset of our balance sheet and launch of our profitable growth strategy.
“As we look ahead, we have instilled a structure and discipline into the business which will mitigate against future issues and allow us to grow from these strong foundations.”
Gilmartin added: “We are pleased to have delivered results in line with expectations for 2022, including a return to revenue growth – with 8% growth at constant currency.
“This was achieved in a year of major change for the group, under new leadership, as we addressed legacy issues, transformed our balance sheet and launched a new strategy.
“Our strategy is already delivering. We started 2023 with good momentum – our order book for delivery in 2023 is up 10%, headcount is up 8% and financial guidance for 2023 is in line with our medium-term financial targets of adjusted EBITDA growth at mid to high single digit CAGR, with momentum building as our strategy delivers.
“We now we look to the future with confidence as a much stronger company.”