Wood reports loss but diverse assets see revenues swell
● Analysts tout possible return to FTSE 100 for Wood after revenue rises 13%
Aberdeen-based energy services group Wood could return to the FTSE 100, an analyst has predicted, after it reported increased interim revenues, showing signs of the global rebound in its core oil and gas markets, although it swung to an overall loss.
Wood revealed a revenue boost of 13 per cent for the year ended 30 June, hitting $5.38 billion (£4.2bn), as it benefited from recently buoyed energy markets.
The group generated earnings before interest, taxes, depreciation, and amortisation of $260 million, which was at the top end of its guidance range.
The company attributed its $52m loss to non-cash amortisation charges of $125m and exceptional costs of $101m, including an impairment charge and costs related to its acquisition of Amec Foster Wheeler (AFW).
The group generated a profit of $6m for the same six-month period last year.
Wood raised its predicted cost savings from last year’s merger from $170m to $210m and said the integration had led to an extra $100m in revenue synergies.
The latest results come on the back of Monday’s announcement that the group had secured a six-year contract with Shell in the Philippines.
Chief executive officer Robin Watson said he was confident of prospects for the latter half of the year and called the group’s order book, which currently stands at $10.6bn, “encouraging”.
Speaking to The Scotsman, he said the business had established “an excellent growth platform” by reducing oil and gas operations to around 60 per cent.
He said: “Wood is delivering strong operational cashflows which underpin our deleveraging plan.
“We have good revenue visibility and remain confident of delivering a stronger second half. Our full year outlook is unchanged; we are seeing recovery in our core oil and gas market and good contract awards in broader industrial sectors.
“We remain on track to deliver growth in 2018 in line with previous guidance and market expectations.”
Although the North Sea is now a less material part of the Wood portfolio, currently worth 6 per cent compared with 40 per cent in 2010, Watson said the group is committed to remaining in Scotland.
He said: “Despite the shift in the local market we’re committed to keeping a company of our scale, shape and size headquartered in Scotland.”david Barclay, head of office at investment manager Brewin Dolphin’s Aberdeen branch, said: “The rising price of oil has had real benefits for Wood and its integration with [AFW] continues to pay dividends… With a market capitalisation approaching £4.5bn, it may not be long before Wood makes a return to the FTSE 100, which could further bolster the share price with buying support from tracker and passive funds.”