Wood takes a tumble despite turnaround progress
Shares in Wood Group took a tumble despite CEO Ken Gilmartin stating that the energy services group’s turnaround is progressing well.
The shares closed 25.40p (15.93%) lower at 134.25p.
He told investors that the refreshed strategy has been accelerated by the sale of Built Environment Consulting and helped by the work done to focus the group on lower risk, reimbursable work.
Trading in the first ten months of this year was in line with expectations said margins were likely to be flat in the near term as it reinvests behind its growth plans, but said margins were likely to be flat in the near term as it reinvests behind its growth plans.
“We have addressed legacy issues and our strong balance sheet will allow us to deal with the defined schedule of resulting cash outflows,” he said.
“Our strategy will deliver returns for our shareholders and today we have set out new financial targets, including to grow EBITDA by mid to high single digit CAGR over the medium term, with momentum building over time as our strategy delivers.
“Most importantly, based on the highly cash generative nature of our underlying businesses, we expect positive free cash flow (after the impact of legacy cash outflows) from 2024 onwards.”
Trading in the first ten months of the year was in line with the board’s expectations and it confirmed its full year guidance
It expects revenue to be between $5.2 billion and $5.5bn, and adjusted EBITDA to be broadly around the middle of its guidance range of $370m and $400m.
This is after the negative impact from recent exchange rate movements, which has had a c.$200m revenue and c.$10m EBITDA impact.
Russ Mould, investment director at AJ Bell said the market needs to see tangible evidence of progress.
He noted that Wood Group was the biggest faller of the day. “The company’s CEO was upbeat about the long-term prospects and the turnaround plan which should see it ideally placed to grab opportunities from the UK’s evolving energy infrastructure network.
“But a bird in hand is something to be valued in today’s uncertain times and investors are skittish about promises until they’re proven to be deliverable.”