The Courier & Advertiser (Angus and Dundee)
‘Resilient’ performance gives firm ‘momentum’ following difficult year
Global engineering and consultancy Wood has “momentum” on its side after a “resilient” performance in a difficult year, the company’s boss said yesterday.
Robin Watson, chief executive, was upbeat about prospects for the Aberdeen firm after a strong finish to 2020 and good start to the new trading year.
He was speaking after Wood announced pre-tax losses of £107 million for last year, compared with profits of £107m in 2019, on revenue that was down by 23.5% at £5.44 billion.
And in a measure of the impact of Covid-19 and a slump in commodity prices on its global operations, Wood started this year with around 10,000 fewer employees – stripping out the impact of asset sales – than at the beginning of 2020.
Mr Watson said the headcount had reduced to about 40,000 from around 55,000 this time last year, with 5,000 employees also leaving the group via disposals.
The resilience he referred to was based on the company continuing to win new work around the world, as well as its success in cutting costs quickly to protect margins – these fell only slightly to 8.3% on an earnings before interest, taxes, depreciation and amortisation basis – and reducing its net debt by £295m to £727m by the end of last year.
Wood’s order book for 2021 delivery was worth about £4.7bn at the end of 2020, down by around 17% on a year earlier due to “macro-conditions and discerning bidder approach”.
But Mr Watson said the company had started 2021 with “a bit of headroom” and was “seeing some momentum” in the order book.
“It has been a tough year,” he said.
“But we have been able to benefit from the strategic repositioning we have been doing for the past five years.
“This has allowed us to respond to exceptionally turbulent market conditions.”
Mr Watson said the firm’s broad base of expertise and experience meant it was well-placed to play a key role in the energy transition.
Achieving net-zero goals will take more than just “banter” he said, adding: “You need engineers and consultants.
“They are the ones who are going to provide the solutions.”
Wood said discussions concerning investigations by the UK’S Serious Fraud Office and authorities in the US, Brazil and Scotland were at an advanced stage and likely to result in settlements during the second quarter of 2021.
These are expected to cost the group about £142m, with a provision of £33m having already been booked in the 2019 accounts. The remainder of the total is accounted for by a provision in the 2020 figures.
The fraud inquiries relate to the past activities of Amec Foster Wheeler (AFW) along with “predecessor companies and associated persons”, and are part of a wider corruption probe into the activities of Monaco-based Unaoil. Wood completed its £2.2bn acquisition of AFW in 2017.
Stuart Lamont, investment manager in the Aberdeen office of wealth manager Brewin Dolphin, said: “There are still significant challenges ahead but, with a plan for growth, Wood is in a decent position as the economy and its markets move towards recovery.”