Wood powers up with Sellafield nuclear work

Wood, the Aberdeen-headquartered energy and engineering services giant, has continued its strong run of contract wins with a $66 million (£52m) deal to supply kit for the Sellafield nuclear site in Cumbria.

An operator pictured in one of the control rooms at the Sellafield site. Picture: Contributed
An operator pictured in one of the control rooms at the Sellafield site. Picture: Contributed

The major ten-year contract will be seen as a further endorsement of the group’s acquisition of Amec Foster Wheeler, which was undertaken last year and has led to strong revenue synergies.

Wood said its latest deal covers all stages of system design, manufacture and assembly of equipment, obsolescence management and maintenance support to project work and decommissioning carried out by the company that oversees Sellafield.

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The contract was secured by a joint approach from nuclear and automation and controls specialists within Wood, which operates in more than 60 countries and employs some 60,000 people globally.

Bob MacDonald, chief executive of Wood Specialist Technical Solutions, said: “We are looking forward to working with Sellafield Limited and demonstrating the strength and depth of controls integration expertise across the whole of Wood, bringing together our nuclear expertise with our automation and controls capability.

“Securing this important framework is proof of the rationale for acquiring Amec Foster Wheeler 12 months ago and a good revenue synergy. We could not have won this contract as separate businesses.

“Our aim is to provide Sellafield with long-term supply chain capability and capacity, implementing standardised solutions, building innovation into design and delivery, managing obsolescence, and reducing lifecycle costs.”

Last week, Wood said it was on course to meet full-year forecasts after returning to growth in 2018 while unveiling a new US contract.

However, shares came under pressure after the group cautioned that the recent volatility in commodity prices may “impact confidence and the pace of contract awards” within its oil and gas business.

Releasing a trading update, Wood said that full-year revenue was expected to be in the region of $10.9 billion (£8.7bn) to $11.1bn, up more than 10 per cent from the previous year, while full-year underyling earnings were likely to come in at $620m to $630m.

The firm noted that its positive trading momentum had continued with its full-year results set to demonstrate “good organic revenue growth”. It added that it had delivered a stronger second half, reflecting its traditional bias towards the latter part of the year, boosted by the phasing of cost savings, projects and the wider market recovery.

Wood told investors: “Looking to 2019, the outlook remains generally favourable across our industrial end markets. Although our medium-term outlook remains positive, in oil and gas recent volatility in commodity prices may impact confidence and the pace of contract awards.”

The FTSE 250-listed group also said it had been awarded a major contract to deliver engineering, procurement and construction services on a “world-class” plastics manufacturing facility on the US Gulf Coast. It noted: “This is a strategic and significant contract to Wood.”