John Wood Group plc, the Aberdeen-based engineering and consulting giant, said on Tuesday it made a statutory loss of $983 million in the six months to June 30, 2024, amid exceptional items of $966 million.
However, Wood also announced half-year adjusted EBITDA earnings up 8.5% to $219 million and an order book up 3.6% to $6.2 billion — and the group maintained its earnings forecast for the current year and 2025.
Wood said its first-half revenue was down 4.8% at $2.844 billion.
On August 5, Dubai-based firm Sidara finally said it did not intend to make a firm takeover offer for Wood “in light of rising geopolitical risks and financial market uncertainty at this time.”
On its first-half results, Wood said: “We made an operating loss in the period of $899 million. This primarily reflects an impairment of goodwill of $815 million and $140 million of charges related to the exit of LSTK (lump sum turnkey) and large-scale EPC (engineering, procurement and construction) business.
“The goodwill impairment relates to legacy acquisitions and reflects both higher discount rates, due in part to increased market volatility, and a more prudent view on growth assumptions, partly reflecting the geo-political environment in our markets.
“We made the strategic decision to exit the lump sum turnkey and large-scale EPC work in 2022. The exit from this type of work has taken time, with multiple contracts being wound down.
“We have now finalised our view on the exit from such work, including a detailed review of contract positions, an assessment of the current material exposure and risks on remaining EPC contracts, and an assessment of the recoverability of outstanding receivable balances.
“As a result of these updated views, we have recognised a $140 million exceptional charge, consisting of $53 million write-off of receivable balances, $61 million of new provisions, and $26 million related to final settlements. The anticipated cash impacts of these charges are spread over many years and are included in our unchanged cash guidance.”
Wood said $6 million of its costs related to Sidara’s takeover proposals in the period.
Wood CEO Ken Gilmartin said: “These results demonstrate continued progress on our turnaround. Our strategy continues to deliver higher EBITDA and a larger order book, and we are improving the quality of our business with better pricing and higher margins.
“Our Simplification programme is progressing at pace, with nearly half of the annualised $60 million savings from next year already secured.
“I am also pleased that we have achieved all of this while recording our highest level of employee satisfaction ever, putting Wood in the top quartile of all our peers and demonstrating that our team is focused and energised on driving Wood to its full potential.
“We have finalised our views on our exit from lump sum turnkey and large-scale EPC work and have reflected this in our results today, though crucially this has not changed our cash guidance. We have also recognised a non-cash goodwill impairment in our Projects business, which relates to legacy acquisitions.
“Generating sustainable, strong free cash flow continues to be an important focus for the delivery of our turnaround. Our adjusted operating cash flow was up in the period, and we continue to anticipate reducing cash drags going forward. We welcomed Arvind Balan as our new CFO in April and he has brought a renewed cash focus across the business.
“As we look ahead, we remain confident that our strategy, actions we are taking and growth potential across our markets will deliver significant value for our shareholders. We are pleased to reconfirm our outlook today, both for 2024 and 2025, including generating significant free cash flow in 2025.”