The chief executive of Wood Group (LON: WG) says the company is making steady progress on its growth strategy after a strong start to 2023.
In a half year trading update, published on Thursday, the Aberdeen-headquartered energy services giant reported “good trading” across all business units.
Revenue for the first six months of the year is expected to be around $2.9 billion, up around 15%, while adjusted EBITDA is at about $195 million, an increase of some 6%.
Wood also boosted its headcount during the period by 5%, taking its total workforce to 35,600 people, as it bagged “significant contract wins”.
Among them was a $250m operations renewal, a significant life sciences contract in the US, and a large minerals contract in Europe.
It means the London-listed group’s order book, as of June 30, stood at around $6bn.
That is an increase of 3% on a constant currency basis, and excludes the Gulf of Mexico business – Wood finalised the sale of its offshore labour supply operations in the region earlier this year.
As per previous guidance, the company says it is on-track to deliver positive free cash flow in 2024, after a “transformative” 2022 in which management faced up to legacy issues.
Ken Gilmartin, Wood’s CEO, who marked a year in post earlier this week, said: “We are making good progress in delivering on the growth strategy we outlined last November. Trading shows continued good growth and margins in line with our expectations.
“We have won a number of significant contracts in energy, minerals and life sciences during the period, all testament to the exciting position Wood holds in its key growth markets. As we look ahead, we are confident of our delivery both for the full year and medium term, including a return to generating positive free cash flow.”
Apollo back and forth
It has been something of a turbulent year so far for Wood, which was the subject of repeated takeover bids from US firm Apollo Global Management.
The company knocked back multiple proposals from the New York –headquartered fund, repeatedly saying that they undervalue the firm.
Apollo eventually relented in May, announcing that it had decided against making another takeover bid.
At the time Wood said it “remains confident” in its strategic direction and long-term prospects “and believes that, following a transformative year in 2022, including new executive leadership and a new strategy, Wood is well placed to deliver substantial value for shareholders”.
Stuart Lamont, investment manager at RBC Brewin Dolphin, said: “Today’s results from Wood will be closely watched, after the takeover by Apollo fell apart earlier this year. Strong revenue growth, a robust project pipeline, and an expected return to positive free cashflow in the second half of the year are indicators of why the private equity group offered 240p per share, when Wood currently trades at nor far off half that price. But shareholders will want to understand what the plan is from here in future updates, now that the company looks likely to remain on the public market and another bid from a potential suitor is yet to materialise.”
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