Aberdeen's Wood on track buoyed by 'significant' contract wins with likes of Shell and Harbour Energy

Wood, the Aberdeen-headquartered energy and engineering services heavyweight, has secured several “significant” contracts in the third quarter allowing it to stick by its full-year forecasts.

Wood’s fortunes have tracked the growth of the North Sea sector and with it a push into related energy and specialist engineering markets, both domestically, and increasingly, overseas.

The FTSE 250 group said overall revenues topped $1.48 billion (£1.2bn) in the three months to the end of September, representing year-on-year growth of 8 per cent, with all of its business units witnessing growth. It also highlighted that third-quarter and year-to-date adjusted underlying earnings were in line with expectations.

Key contract wins in the third-quarter included a new strategic partnership with Harbour Energy for its UK North Sea operations, which with associated contracts for five years (with five one-year extensions) is worth around $330 million. Wood, which employs getting on for 36,000 people worldwide, also sealed a global framework agreement with energy major Shell to deploy its expertise in decarbonisation, digitalisation and asset life extension. The order book at September 30 was sitting at some $5.9bn, flat on a comparable basis to the year before.

Chief executive Ken Gilmartin said: “We have delivered another quarter of strong growth in revenue and Ebitda [earnings before interest, taxes, depreciation and amortisation] as we continue to execute against the growth strategy we set out a year ago. I am particularly pleased to see continued progress across sustainable solutions, now making up 35 per cent of our pipeline, and some excellent contract wins in the period. Reflecting the momentum that we are building in the business, we remain confident that our actions, business model and strategy are delivering.”

Analysts at Citi Research said they liked Wood’s “asset-light business model” and its focus on energy transition.

In August, Gilmartin said Wood was at a “clear inflection point” as he set the group on course for stronger full-year numbers. He highlighted the firm’s growing diversification, with an increasing focus on renewables, and said clear progress had been made since the group outlined its growth strategy last November.

His comments around news of better-than-expected first-half earnings came after US private equity suitor Apollo Management dropped its proposed takeover of Wood in May. Apollo had put forward a series of bid proposals, with the last one for 240p a share in cash, valuing the Scots group at some £1.66bn.

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