Revenue slides at Wood Group after Sidara snub but guidance kept
Engineer Wood Group maintained its full year guidance despite sliding into the red after a dip revenue in its first set of results since Emerati competitor Sidara pulled out of a deal for the firm at the eleventh hour.
The Aberdonian firm, which generates much of its revenue providing engineering services to the oil and gas sector and is a constituent of the FTSE 250, saw its revenue dip by 4.8 per cent in the six months to June 30, from $3bn (£2.3bn) in 2023 to to $2.8bn (£2.2bn).
The period also saw the company fall to a loss of $899m (£691m), having announced a profit of $23m (£17.7m) in the same period the previous year.
But it maintained its full year guidance for both 2024 and 2025, attributing its dip into the red to writing off a $140m (£107.8m) exceptional charge.
The results follow protracted interest in Wood Group from Dubai-based engineer Dar Al-Handasah – known as Sindara.
Over the course of several months the Emirati firm tabled four separate bids for its London-listed rival, all of which Wood Group rejected out of hand apart from the fourth and final bid.
Bosses then started engaging with Sidara’s top brass in early June after receiving a bid that valued Wood Group at 230p a share.
An agreement was widely expected, before Sidara pulled out of the deal at the last minute, citing “rising geopolitical tensions” and “financial market uncertainty” as being behind their decision not to pursue a deal.
The news sent shares in Wood Group tumbling by 32 per cent per cent to 130p, where they have roughly stayed since.
Commenting on the group’s latest results, chief executive 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 m (£46.2m) savings from next year already secured.”
Despite announcing a dip in revenue and statutory loss, the earnings are the latest sign that Wood Group’s three year root and branch turnaround plan, which it is roughly half-way through, is beginning to bear fruit.
Its order book was up 3.6 per cent on the previous year, while earnings before interest, taxation, debt and amortisation, rose by 8.5 per cent.
John Moore, senior investment manager at RBC Brewin Dolphin, said: “Despite the headline loss for the first half of the year, Wood has generated better cash flow which will help in its path to recovery.
“The company has been going through a lot of change against a mixed industry backdrop, and the combined costs related to that process have seen Wood swing to a loss. But, there was a reason Wood attracted so many bids at a significant premium to its current share price – and there are hints of why in the company’s outlook for 2025, which indicate that strong free cash flow and greater profitability are on the horizon.
“Execution of this strategy will be key to the company’s independence and future prosperity.”