Wood Group (LON:WG) chief executive officer Ken Gilmartin hosed down media reports of potential job cuts as the firm seeks to continue its growth strategy.
Wood released its full year financial results for 2023 today, which saw a return to positive cash flow and an 8.8% increase in revenue.
However, the Aberdeen-headquartered firm’s net debt increased by 49% to reach just under $1.1bn, with Wood announcing a “simplification programme” in a bid to reduce costs.
The company’s shares fell by around 4.59% in early trading following the release of its results.
But speaking to Energy Voice, Mr Gilmartin said he was “incredibly proud” of the turnaround in Wood’s fortunes and said the company is looking hire up to 500 people in the UK.
“We’ve delivered a really exceptional year, very strong growth in the first year of our strategy,” he said.
“Our order book is up, our pipeline is up… and then with simplification on top what we’re doing is we’re just continuing to build a better quality business.”
Mr Gilmartin said the changes to the business seen in 2023 will underpin a “really bright future for Wood”.
Wood job cuts speculation
While the Wood financial report mentioned efforts to “right-size” its central functions and reduce the number of central function roles, Mr Gilmartin denied media speculation that this would lead to hundreds of job cuts.
“That was speculation, and it didn’t come from us,” he said.
Overall, he said Wood’s headcount across the company is growing.
“We’re making changes, we’re not downsizing,” he said.
“Our simplification programme is really focused on enhancing that quality of the business that we have.
© Supplied by -“It includes addressing our IT costs, it includes our real estate costs, it looks at investing in automation of some of our processes and procedures.”
Mr Gilmartin said while Wood will look to reduce the number some of its overhead functional positions, the company is still in the early stages of the process.
“We’re early on in the process right now, we don’t have any guidance in terms of the numbers of people,” he said.
“But we’re still recruiting heavily, [for] over 500 people that we’re looking for to fill vacancies in the UK, 200 in Aberdeen.
“The reality is that we’re looking at central functions and people in central functions. A lot of those resources will be redeployed. We’re a large organisation, there’s a skill set that’s transferrable.”
In February, the company confirmed 34 jobs were being cut across the UK, including 22 in Aberdeen, to “drive efficiency”.
Wood is also divesting parts of its business, revealing the prior month its plans to offload Ethos Energy, set up in 2014 to be a “gas turbines giant” which today has 4,000 staff globally.
Wood targets continued momentum
Looking ahead to 2024 and 2025, Mr Gilmartin said Wood will target continuing to build the growth and momentum established in 2023.
“We’ve got really strong markets, energy as well as materials,” he said.
“Our energy security [business] as well as energy transition is growing really well.
“[Wood is] well positioned, good growth, great opportunity in the North Sea and really pleased last year to sign that contract with Harbour Energy for over $300 million. That was a huge win for us.”
Through 2024, the company will now target greater automation of processes and procedures to increase efficiency.
“The more time we can have our people front of office engaging with our clients, and less time spent back of office doing processes and procedures, that’s a win for all of us,” Mr Gilmartin said.
© Supplied by Harbour Energy“That’s what we’re always going to continue to do. Our business evolves and the simplification that we’ve had is just good business practice.”
Other priorities for Wood this year include growing the business to reduce its significant debt figure, Mr Gilmartin said.
“We’ve always said as a company that we have prioritised, and we’re always going to prioritise, that return to positive free cash flow,” he said.
“That’s going to be the thing that’s going to impact our net debt position and in order to do that, number one, is growing the business. That’s first and foremost.
“And as we’re growing the business, making sure that we’re not increasing our overhead and we’re leveraging as much as we possibly can.”
Mr Gilmartin said the “positive momentum” seen in the company’s adjusted operating cash flow, which increased by $260m compared to 2022, was a “clear signal that we’re on the right road and the right trajectory”.
Wood sustainable solutions
Elsewhere, Mr Gilmartin pointed to the company’s growth in its sustainable solutions business unit relating to carbon capture, hydrogen and the decarbonisation of oil and gas assets.
“In almost every engagement we have, there’s a decarbonisation element involved in that [now],” he said.
“Our clients are looking at how to reduce the carbon intensity of what it is they’re doing in the energy security space.
“It’s a large portion of what we do and it’s going to continue to be important. The world needs strong energy security in order to help facilitate the energy transition.”
Mr Gilmartin said Wood took part in over 1,600 studies focused on carbon capture and hydrogen last year.
Revenue within Wood’s sustainable solutions unit grew by 15% to reach $1.3bn.
This represented approximately 22% of Wood’s total group revenues, while 43% of its factored sales pipeline is now within its sustainable solutions business.
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