Wood ups revenue expectation to $6bn as CFO retires

Wood CEO Ken Gilmartin

Shares of John Wood Group, the Aberdeen-based engineering and consulting giant, rose about 4% on Tuesday after it raised its full-year revenue expectation to around $6 billion and said its adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) is expected to be ahead of its previous expectations.

One of Scotland’s biggest companies, Wood operates in more than 60 countries and employs 36,000 people.

Wood also announced that chief financial officer David Kemp intends to retire as CFO after 10 years with the business, but will remain in his role until a successful candidate is in place.

For the six months ended June 30, 2023, Wood said revenue rose 16% to $3 billion amid “excellent growth across carbon capture and hydrogen” and an order book of $6 billion, up 5% compared to December 2022.

Our operating profit was down 26% to $23 million with the reduction mainly reflecting two exceptional items in the period,” said Wood.

“Firstly, we incurred around $5 million of costs related to unsolicited bids from Apollo Management Holdings, L.P which ultimately ended with its decision to not move forward.

“Secondly, we recognised a non-cash receivable impairment of $20 million in relation to one large Power and Industrial EPC contract, a business area we was closed in 2022.

The loss for the period was $27 million and reflects the exceptional items and the high tax charge in the period.”

On May 15, New York private equity firm Apollo Global Management finally said it did not “intend to make an offer” for Wood.

Apollo had said on April 4 it made a “final” and “possible offer” for Wood Group pitched at £2.40 per share in cash.

On Tuesday, Wood shares rose about 4% to around £1.54. The Aberdeen firm’s stock is up about 9% so far in 2023 but is down roughly 80% over the last five years. In March, Wood CEO Ken Gilmartin said “… we have not delivered for our shareholders in recent years.”

On Tuesday, Gilmartin said: “When we announced our growth strategy in November last year, we set out a plan for Wood to deliver on its significant potential, and I am delighted that our results show the clear progress we are making.

“We have made a good start to the year, delivering growth in revenue, EBITDA, headcount and our pipeline, all while furthering our inspiring culture, as evidenced by our highest-ever employee net promoter score.

“As we look ahead, we are confident that our actions, the business model we have implemented and the market growth opportunities to which we have aligned, support the momentum we are building in our business.

“As such, we are increasing our full year guidance for the year for revenue and EBITDA.”


John Moore, senior investment manager at RBC Brewin Dolphin: “Despite the reorganisation and restructuring, Wood’s revenue on continuing operations is up on where it was this time last year and today’s results offer some potential for recovery and if executed, better times for shareholders.

“The well-publicised bid by Apollo was arguably a costly and ultimately distracting exercise with the outcome heightening pressure on the board to lay out a vision for the years ahead.

“Key tasks for the incoming CFO will be reducing debt further, improving cash generation and profit margins and the continued streamlining of the business.

“Positively Wood’s end markets remain robust, but growth will be hard to come by and as a result, self-help remains the main driver for shareholder returns.”