Aberdeen's Wood 'out-delivering' as order book swells and earnings hit the mark
Wood, the Aberdeen-headquartered energy and engineering services heavyweight, has set a course for better-than-expected core profits thanks to a strong order book and work on major green energy projects.
Chief executive Ken Gilmartin said the group was now one year into its “strategic growth journey” and its results were showing clear progress. “We are excited about the trajectory that we are on,” he told The Scotsman. “We have out-delivered in year one, which we are very proud of. We have seen growth in all of our end markets and sectors and we have been outperforming in some areas. We have also kept costs contained even though we are growing, which is another strong positive for us.”
Investors reacted positively to the news that adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) for 2023 were now forecast to come in at around $420 million (£329m) to $425m, up by some 9 per cent. Revenue was up by a similar percentage to $6 billion (£4.7bn) with good growth across all business units, the group said in a trading update ahead of March’s full-year results.
Wood’s order book of around $6.1bn is up 4 per cent on a comparable basis with about 40 per cent of the bidding pipeline now from “sustainable solutions”, up from 35 per cent. The group, which employs some 36,000 people globally, highlighted a number of significant contract wins in the fourth quarter including supporting one of the world’s largest offshore clean power projects in Germany, work for a “world-leading” green hydrogen project in Spain and a two-year operations contract extension with Equinor in the Mariner field in the North Sea.
Gilmartin said: “We have a very balanced order book. We’ve got energy, we’ve got energy security, we are seeing growth in the energy transition space where there is a high degree of engineering complexity and we have some of the brightest and best engineers on the planet. That capability has been developed over decades.
“We have geographic diversification - our eggs are not all in one basket. The Middle East has been growing strongly for us as has the UK and North America. Our job is always to position ourselves so that we continue to grow and to provide the solutions for our clients.”
The update comes after US private equity suitor Apollo Management dropped its proposed takeover of Wood last 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 almost £1.7bn.
Analysts at investment firm Investec noted: “Wood has delivered a strong set of results, delivering slightly ahead of expectations and is demonstrating strong signs of progress on its growth strategy with another strong quarter of revenue and Ebitda growth. Importantly, the company is winning significant contracts in its key growth markets and is confident in delivering its medium-term ambitions.”
Gilmartin added: “We are confident that our actions, business model and strategy are delivering and look forward to giving a further update in March.”
In August, Wood said it was at a “clear inflection point” after robust first-half results.
Want to join the conversation? Please or to comment on this article.