Wood (LON: WOOD) has forecast a drop in earnings and revenues for its 2022 results, down from the previous two years.
A trading update has projected adjusted EBITDA of $375m – $385m for the financial year, down at least 30% from $554m in 2021, and $630m in 2020.
It’s after Wood completed the $1.9bn sale of its built environment segment last year, which had earnings of around $150m for 2021 and has not been included in the 22 figures.
Wood’s revenues will be down to around $5.4bn, compared to $6.4bn in 2021 and $7.5bn in 2020.
Wood said its revenues are adversely impacted by around $275m of foreign exchange rate movements, while growth in its consulting and operations arms were offset by declines in its projects segment.
Projects saw revenues decline by around 7% over the year to around $2.2bn, but returned to growth in the second half of the year, Wood said of its results.
Looking at 2023, Wood said it expects “material improvement” in underlying operating cash flows in 2023 but this will be “outweighed in the short term” by payment of “legacy liabilities”.
The firm said it expects a return to “positive free cash flow in 2024”.
CEO Ken Gilmartin said the 2022 results, which will be disclosed in full on March 28, are in line with epectations.
“We are focused on growth in energy and materials, both with structural growth drivers – energy security, energy transition, net zero and the circular economy – which create long term growth opportunities for Wood. Our leading positions in these markets, long-term client relationships and expertise in decarbonisation and digitalisation is enabling us to win additional market share.
“We have attractive growth prospects in our core markets, we are trusted by our clients, and we have the talent and solutions to enable a net-zero future. We’re focused on designing a strong future for Wood and enter this New Year with positive momentum.”
Stuart Lamont, investment manager at RBC Brewin Dolphin, said: “It has been a tough spell for Wood, with the share price now back at levels last seen in 2005. However, the company has been boosted by some recent analyst upgrades and today’s results highlight a few of the reasons why.
“Revenue continues to grow and debt, a perennial issue for the company in recent years, is to coming down, helped by the sale of the built environment operation last year. There are also positives to take from a relatively strong order book. Nevertheless, margins remain under pressure and, given the rising cost of debt, the market will want to see even more action to bring it down. Wood is beginning to turn a corner, but there is still some distance to go.”
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