Engineer's progress

Wood ‘delivering on simplification programme’

Keith Gilmartin
Ken Gilmartin: we are winning exciting and complex work

Wood Group, currently subject to bid speculation, said it is continuing to deliver on its strategy to simplify the Aberdeen-based business.

Adjusted EBITDA was up by 4% to c.$210 million with margin expansion of 7.4% more than offsetting an expected fall of 6% in revenue, it said it an update on the half year to the end of June.

The company’s order book is up 2% to more than $6 billion while the simplification programme is “moving at pace” with around $25 million of annualised savings already secured of the total annualised savings target of around $60 million from 2025.

Ken Gilmartin, CEO, said: “Our growth strategy continues to deliver, with further growth in EBITDA and order book. Crucially, we are now seeing the improving quality of our business coming through with margin expansion as we focus on engineering services and consulting and move away from EPC work.

“As we look ahead, we remain focused on delivering our potential, including generating significant free cash flow next year. We are winning exciting and complex work across our businesses whilst progressing both our Simplification and disposal programmes. We are pleased to reconfirm our outlooks for both this year and 2025”.

He said the company continues to expect high single digit growth in adjusted EBITDA, before the impact of disposals. Performance will be weighted to the second half, reflecting the typical seasonality of the business and the phasing of the in-year benefit of the simplification programme.

The board expects EBITDA growth in 2025 to exceed its medium-term target.

Zoe Gillespie, investment manager at RBC Brewin Dolphin, said: “Speculation continues around Wood’s future, with Sidara having to make an improved offer or drop its bid to buy the company by July 31.

“The most recent bid valued Wood at a 52% premium to its current share price, putting pressure on the management team to deliver on plans to reverse the engineering group’s fortunes, after the share price fell to levels last seen in 2009.

“Wood’s simplification programme is delivering results and its prospects are improving, but there is still some way to go to close the gap between its current valuation and the offers made for the company. Shareholders will want to see clear evidence that will be made up if another bid is going to be rejected.”

As announced on 3 July, Dar Al-Handasah Consultants Shair and Partners Holdings (Sidara) is required either to announce a firm intention to make an offer for Wood or to announce that it does not intend to make an offer by no later than 31 July.

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