Wood Group Raises Profit Outlook on New Contract Wins
- Wood Group’s order book increased by 5% to approximately $6 billion
- The company secured a contract worth around $250 million from Brunei’s largest energy producer
- Projected full-year adjusted core earnings expected to exceed previous expectations
John Wood Group has upgraded its annual profit guidance following significant contract wins and strong growth in its projects business.
The FTSE 250 engineering services company announced on Tuesday that its adjusted core earnings for the year are now expected to surpass previous expectations.
Wood Group has also raised its revenue outlook, with turnover increasing by approximately 20% at constant currency rates to $3 billion (£2.4 billion) for the six months ending in June.
Upgraded forecast: The engineering services company John Wood Group said its adjusted core earnings for this year are now forecast to be ‘ahead of our previous expectations’
Sales in Wood Group’s projects division rose by 29.6% to $1.25 billion, driven by strong demand from the chemicals, oil, and gas sectors, which offset the decline in lump sum turnkey activity.
Compared to the same period last year, the projects division was the only segment to experience growth in its order book, due to major engineering services contracts with Euro Manganese and GSK’s life sciences engineering deal valued at approximately $50 million.
The company’s overall order book increased by 5% from the end of December to around $6 billion.
Wood Group recently secured significant contracts, including a two-year extended deal worth approximately $250 million to provide services to Brunei Shell Petroleum, the largest energy producer in Brunei.
Ken Gilmartin, CEO of Wood Group, stated: “We are confident that our actions, business model, and aligned market growth opportunities support the momentum we are building in our business. Therefore, we are raising our full-year revenue and EBITDA guidance.”
Shares of John Wood Group rose 3.8%, or 5.6p, to 153.7p on Tuesday morning, making them the second-best performer on the FTSE 250 Index.
Wood Group also announced that David Kemp, its Chief Financial Officer, will be stepping down after a decade in the role. Kemp joined the company in 2013 and played a key role in the acquisition of major rival Amec Foster Wheeler.
During his tenure, Wood Group divested several divisions, including its nuclear and consulting arms, to reduce its high debt burden.
The company was the subject of an unsuccessful takeover attempt by private equity firm Apollo Global Management.
Adam Vettese, an analyst at eToro, commented: “The reasons that led Apollo to bid for the firm in the first place persist, which means another bidder could move in at some point with the share price depressed – or even Apollo again once its six-month cooling off period expires.”