Energy services group Wood beat market expectations last year as it reaped the benefits of its takeover of rival Amec Foster Wheeler – but said that a slower-than-expected boost from recovering oil prices would hold back progress on cutting debts.
The Aberdeen-based group said it had now secured $600 million (£451m) of contracts bidding as a combined business, up from the $500m previously reported.
Wood said operating profit before exceptional items rose by 68 per cent to $357m. Losses for the period reduced to $7.6m from $30m after exceptional costs of $183m related to areas including redundancy and restructuring.
Revenue for the year rose by 11.7 per cent to $11.03 billion from $5.39bn on the back of a full-year contribution from Amec. The group’s order book currently stands at $10.3bn, broadly in line with the position it reported in June.
Despite the better-than-expected results, shares in the group – recently relegated from the FTSE 100 – fell sharply yesterday after the firm said deleveraging would be more gradual than originally expected this year due to a slower sector recovery in its oil and gas markets. Debt reduction last year was in line with forecasts, down to $1.5bn from the $2bn it reached after the Amec deal.
Chief executive Robin Watson said he was “really excited about the platform we now have and how we can unlock the potential”.
He said: “We have built a unique platform and are in the early stages of what we can achieve. Our performance in 2018 has strengthened our conviction in Wood’s potential, and we are excited about our prospects. We are confident of achieving further growth in 2019.”
In the North Sea, which accounts for around 5 per cent of revenues, Watson said the company had maintained market share, although volumes have declined.
“We’re still probably the top employer and most active contractor in what we do in the North Sea,” he said. Watson said the company was seeing increased activity in demand for modification work being carried out on North Sea infrastructure and had won work off a number of new entrants into the sector. The results were accompanied by news that chairman Ian Marchant, who has served on the Wood board since 2006, intends to step down over the next year.
David Barclay at Brewin Dolphin Aberdeen, said a strong order book gave Wood good visibility of future revenues. “The environment for the oil services market is largely wedded to the oil price, which has been volatile in recent months. However, with an ongoing focus on debt reduction and cash generation, Wood looks to be in an encouraging position.” Shares closed down 8 per cent at 550p.