Aberdeen's Wood on 'positive' recovery path after pandemic knocks first-half result

Wood, the Aberdeen-headquartered energy and engineering services group, has posted a fall in first-half revenues after taking a hit from the pandemic but flagged a solid order book as it transitions away from oil and gas.

The firm posted a 23 per cent slump in turnover to just under $3.2 billion (£2.3bn) for the six months to the end of June. It blamed the ongoing impact from the Covid-19 crisis, as well as a $74 million loss of revenues from the sale of parts of the business.

This left the group with bottom-line losses of around $11m, broadly in line with a year ago.

Adjusted underlying earnings - the group's preferred measure - were down 14.1 per cent to $262m, matching recent guidance.

Aberdeen-headquartered Wood is playing an increasing role in key renewable energy projects around the world.

The group held off from paying any interim shareholder dividend as its results continued to show the effects of the pandemic, with revenues set to fall overall in the full-year. But it struck a confident tone on the outlook and said a solid order book helped it put faith in a return to second-half growth.

Chief executive Robin Watson said the period marked an “inflection point” while acknowledging the pandemic had accelerated change within the business."The first half of 2021 reflects improving momentum in activity in the second quarter and a strong margin improvement, with increased margins in all business units and a greater weighting of high margin consulting activity,” he noted.

"Trading momentum and good growth in our order book, which is up around 18 per cent year-to-date, underpin our confidence in delivering a stronger second half which will reflect a return to growth compared to both the first half and of 2021 and second half of 2020."

The group, which has been clamping down on costs, said its order book stood at $7.7bn at the end of June. It added that it has around $3bn of its order book due to be delivered in the second half.

Wood recently secured the first ever UK government-backed "green transition loan" in a deal worth £430m. Under the agreement, the group will commit to increasing its clean energy portfolio and significantly reducing its greenhouse gas emissions over a five-year period.

Stuart Lamont, investment manager at wealth management firm Brewin Dolphin, said: “[This] update from Wood shows the company is on a positive path towards recovering from the impacts of Covid-19 with long-term contracts being renewed and continuing momentum for the consulting division.

“Its order book is up 18 per cent since the turn of the year, and while revenue is down 22.9 per cent, growth looks set to be on the agenda for the next six months.”

Adam Vettese, analyst at investment platform eToro, noted: “While the group has reported a small loss for the first six months of the year, it’s encouraging to see an improvement in its margins as well as solid order growth.

“The energy services company trimmed millions in costs earlier in the pandemic and is still resisting paying a dividend in order to repair its balance sheet, which it is slowly doing.

“Oil demand is recovering, which will help, but uncertainty remains and Wood Group is understandably playing it cautious.”

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