Wood Group (LON: WG) expects to make around $165m after signing separate sales agreements to sell two of its non-core businesses.
The group will sell its stakes in Aberdeen-based Ethos Energy Group, a joint venture focused on rotating equipment, and CEC Controls Company, an industrial and process control systems business, in the automotive market.
Combined, these two businesses contributed $41m to Wood’s adjusted EBITDA in 2023.
Wood expects net cash proceeds of around $125m from these disposals when completed, which is expected to be later in 2024.
In addition, Wood will be issued loan notes by EthosEnergy which, on repayment around five years after completion, will generate further proceeds of up to $42m plus interest.
Wood chief strategy officer Jennifer Richmond said: “The sale of these two non-core businesses is further evidence of progress of our strategy. We continue to review Wood’s portfolio in line with our strategic priorities to be selective in our markets and capabilities and steadfast in our commitment to simplify Wood and deliver greater cash flexibility.
“There is a strong strategic fit between both these companies and their buyers, and we are confident both businesses will thrive under new ownership.
Wood previously revealed plans to sell its controlling stake in Ethos Energy as part of a wider strategic growth drive.
Established in 2014 in a joint venture with Germany’s Siemens AG, the company has 4,000 staff globally.
The move forms part of a larger cost-cutting drive as Wood seeks to deliver annual savings of $60m from 2025.
The company’s net debt increased by 49% in 2023, reaching just under $1.1bn.
And this month, the company announced a £754m loss in the first half of the year
However, chief executive Ken Gilmartin shrugged off the news, saying that the results were a one-off and that the company has booked more and profitable business.
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