The CEO of Wood (LON: WG) has not ruled out further divestments as the firm continues to execute its medium and long-term targets.
Its plan, announced at a Capital Markets Day in November 2022, is “very much an organic growth strategy,” CEO Ken Gilmartin tells Energy Voice, but further sales could be on the cards.
“We continue to invest to expand our business in the areas where we see really good returns from that, and I think our results that we’re showing underlines that.
“We’re always looking at portfolio rationalisation as a company. Any large company will always look at making sure that you’ve got and you’re positioned in the best possible way to provide that growth and provide those solutions for companies.”
On Friday the energy services giant announced it plans to sell its 51% stake in Ethos Energy, a 4,000-employee gas turbine business based in Aberdeen and jointly owned by Germany’s Siemens.
That follows the $1.9bn sale of Wood’s Built Environment Business in 2021 to service debt, and the sale last year of its Gulf of Mexico labour operation for $17m to improve financial flexibility.
Friday’s trading update showed key metrics including EBITDA and revenue targets being hit, which Gilmartin says shows the company has “absolutely turned a corner” following issues a year ago when it became a takeover target for private equity giant Apollo.
“I think we’re continuing to build trust with investors,” he said. “I think the trajectory that we’re on is strong, is good and we’re very pleased with it.”
However debt, in part due to foreign exchange and delayed customer payments, was higher than analyst consensus estimates at $680m.
Gilmartin says Wood has “always been focused on debt and we will continue to be focused on debt,” pointing to operating cash flow having significantly improved year-on-year by around $275m.
The firm is aiming for positive free cash flow in 2024 and “significant” free cash flow the following year. “We are on track with that, and that’s going to parlay out into our debt numbers”.
Ethos Energy
Ethos Energy launched in 2014 as a business with revenues of £685m, and Wood said its stake delivered $30m EBITDA to the company in the 2023 financial year.
What does Wood hope for from a sale? Gilmartin is keeping schtum, at least until Wood’s full year results are announced in March.
“What I would say, from an Ethos Energy standpoint, a great business that’s performing really well right now.
“Probably isn’t aligned with where we’re going from a strategic standpoint and it’s probably a good time for somebody to take that on and take that business on to the next level – but a good performing business that’s performing really well, and we’ll update more when we get to March.”
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