Shift in work load
Wood Group slips to loss but portfolio mix boosts growth
Robin Watson: decisive actions (pic: Terry Murden)
Energy services group Wood slipped go an $11m half year loss against a $13m profit last time.
Operating profit before exceptionals were $101m, down on $168m last time. There is no interim dividend.
Revenue came in at $4.1bn down 14.7% (11.5% on a like for like basis).
Chief executive Robin Watson said the company had taken “early and decisive actions” in response to the unprecedented impact of Covid-19 on the global economy and oil price volatility.
“We are benefitting from our broader market exposure and have seen relative resilience in two thirds of our revenue which is derived from chemicals & downstream, renewables and built environment markets.
“We have successfully protected margins, and delivered trading performance at the upper end of guidance while reducing net debt as a result of portfolio optimisation and steps taken to protect cashflow.
“Our objectives are to maintain full year margins in line with 2019 and deliver strong cashflow to further reduce debt in the second half.”
David Barclay, head of office at Brewin Dolphin Aberdeen, said: “Although Wood has swung to a small loss, there are plenty of positives to take from this morning’s update.
“Debt was a focus of investor interest given the amount of cash saved by cancelling the dividend earlier this year, and it has been reduced by nearly one-third – marking significant progress on its position a year ago.
“There are also signs that the business is continuing to diversify its portfolio of work – winning projects in renewables and the built environment, in particular – as it seeks to lessen its reliance on the oil and gas sector.
“With earnings coming in at the upper end of guidance and good visibility over future revenues, if Wood can continue to make headway on its debt in the second half the company will be in a strong position to weather the impact of Covid-19.”