Energy services

Wood makes ‘good start’, CFO Kemp to retire

Keith Gilmartin
Ken Gilmartin: ‘clear progress’

Energy services company Wood said it is confident of delivering growth after posting an 8.5% rise in adjusted core earnings to $202 million for the half year to the end of June.

Pre-exceptional revenue rose 19.7% to $2.98bn while a statutory loss of $27m “reflects the lower level of profit from discontinued operations (Built Environment Consulting), exceptional items and the tax charge in the period.”

The company’s order book of $6bn is up 5% compared to December 2022 at constant currency and excluding the divested Gulf of Mexico labour operations business. Headcount rose 5% to around 36,000.

Ken Gilmartin, CEO, 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.”

David Kemp, Chief Financial Officer (CFO), has announced he will retire and the process to appoint his successor is now underway. He will remain in his role until a successful candidate is in place.

Mr Kemp joined Wood in 2013 as CFO of the former Wood Group PSN business, which is now part of Wood’s Operations business unit. He joined the board in January 2015 and was appointed CFO in May 2015.

Market reaction

Russ Mould, investment director at AJ Bell, said: “After a bid from private equity firm Apollo collapsed earlier this year Wood Group has been under pressure to deliver, and these results go some way towards doing that as it pulls the rabbit of slightly improved full year guidance out of its hat.

“The energy services firm has endured a difficult few years after the 2017 acquisition of Amec Foster Wheeler brought with it a whole deal of problems which the company is still addressing. These continue to act as a drag on cash flow although the situation is starting to improve.

“The main driver of the better first half performance was tight control of costs, no mean feat given how volatile the backdrop has been. Wood Group, which is a big provider of services to North Sea oil and gas firms, has a longer-term challenge of adapting to the energy transition.

“Get it right and there could be big opportunities for the company to help its client base through this process, but it needs to put its legacy problems behind it first.”

John Moore, senior investment manager at RBC Brewin Dolphin, said: “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.”

Shares in Wood were up 6.40p (4.32%) at 154.5p in the first two hours of trading.

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