Wood (LON: WG) plans to sell its controlling stake in Aberdeen-based Ethos Energy as part of a wider strategic growth drive.
In 2014, Wood set up Ethos Energy in a joint venture with Germany’s Siemens AG, creating what was reported as a “gas turbines giant”.
Ethos now has 4,000 staff globally.
Wood, which controls 51% of the business, said in a Friday trading update that it has started the sales process as part of the group’s “strategic delivery”.
In the 2023 financial year, Wood said its share of adjusted EBITDA from the company was $30m.
© Supplied by EthosEnergyEthos Energy is an independent service provider specilialising in rotating equipment for the power, oil and gas and industrial sectors, with offices in Aberdeen, the US, Middle East and Asia-Pacific.
This is the latest in a series of portfolio shifts for Wood, including the sale of its built environment business for $1.9bn to WSP Global in 2021, with proceeds used to cut debt.
Last year Wood sold its Gulf of Mexico labour operations to Danos for $17m to “enhance the financial flexibility” of the group.
Wood
Wood unveiled the sale as part of a full-year trading update, with the energy services giant on track to hit targets as part of an overhauled strategy announced in November 2022.
CEO Ken Gilmartin said the firm has shown “clear progress” in areas including revenue, EBITDA, cash generation and order book.
However analyst firm Jefferies said net debt is the “frustrating key item” of the update at $680m, over 8% higher than consensus estimates at $630m.
Wood said net debt was “slightly above our expectations due to FX (foreign exchange) and the timing of customer receipts in December”.
Jefferies said “However, it is also very important, in our view, that cash exceptionals in 2023 have remained as expected at c.$140m, hence we remain positive on Wood’s overall recovery story, but focus will remain on delivery of the reiterated ‘positive free cashflow in 2024, as previously guided’.”
Wood CEO Ken GilmartinEBITDA is due to increase annually by 9% in FY2023, from $420m to $425m, and the firm said it is also on track to deliver positive free cash flow in 2024 and deliver revenues of around $6bn, up 9% annually.
“Sustainable Solutions”, which covers a vast range of projects from Liquified Natural Gas and chemicals to renewable energy and hydrogen, now accounts for more than 40% of the firm’s bidding pipeline.
Overall order book stands at around $6.1bn, which the London-listed firm said was up 4% on a comparable basis when considering the sale of its Gulf of Mexico labour unit.
Wood is due to release its full year results of March 26, 2024.
CEO Ken Gilmartin said: “We are now one year into our strategic growth journey and our results continue to show clear progress. We have delivered strong revenue and EBITDA growth, improved our underlying cash generation, grown our order book, and continue to see an acceleration in the proportion of sustainable solutions within our pipeline.
“We are confident that our actions, business model and strategy are delivering and look forward to giving a further update in March.”
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