Aberdeen's Wood in 'exciting position' as order book and headcount rise: reaction

Wood, the Aberdeen-headquartered energy and engineering services heavyweight, is in an “exciting position” as it targets key growth markets in the wake of this spring’s aborted takeover approach.

Updating investors on recent trading, chief executive Ken Gilmartin said the group had won a number of “significant” contracts in energy, minerals and life sciences during the first half. Revenues during the period totalled around $2.9 billion (£2.2bn), up by some 15 per cent compared to a year earlier, with good growth in all business units. Adjusted underlying profits were in the region of $195 million (£150m), up by about 6 per cent. However, net debt at the end of June stood at some $650m, compared to $393m at the end of 2022, which Gilmartin said had been expected.

He added: “These results show that the strategy that we embarked on is working. We are in the right markets in the right way and at the right time. We are really starting to win as a company again. We have won a number of significant contracts in energy, minerals and life sciences during the period, all testament to the exciting position Wood holds in its key growth markets.”

The update comes after US private equity suitor Apollo Management dropped its £1.7bn proposed takeover of FTSE-250 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.

John Wood Group plc, to give it its full name, is a storied Scottish business of considerable global scale. Founded more than four decades ago from fishing industry roots, the company’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. Its latest update revealed that the global headcount had risen by 5 per cent during the first half to around 35,600 people.

Among the key contract wins in the period were a $250m operations renewal, a significant life sciences contract in the US, and a large minerals deal in Europe. The order book stands at about $6bn.

Gilmartin said the business had been able to mitigate inflationary pressures, adding: “Where we have had to give salary increases we are in the fortunate position that we are able to by and large pass those on to our clients because they want those critical resources and the best people.”

Stuart Lamont, investment manager at RBC Brewin Dolphin, said: “[These] results from Wood will be closely watched, after the takeover by Apollo fell apart earlier this year. Strong revenue growth, a robust project pipeline, and an expected return to positive free cashflow in the second half of the year are indicators of why the private equity group offered 240p per share, when Wood currently trades at not far off half that price. But shareholders will want to understand what the plan is from here in future updates, now that the company looks likely to remain on the public market and another bid from a potential suitor is yet to materialise.”

Wood, which offloaded its environmental consulting division last year, is due to publish a full set of half-year results on August 22.