Wood 'turning a corner' as Aberdeen energy services group reports solid revenue growth

Wood, the Aberdeen-headquartered energy and engineering services heavyweight, has entered the new year with “positive momentum” after building up a solid order book and reporting strong underlying revenue growth.

Analysts said Wood was “beginning to turn a corner” after the FTSE 250 company released a full-year trading update revealing that its order book stood at $6 billion (£4.9bn), including “strong growth” in its projects business, while about 22 per cent of group revenue was from “sustainable solutions”. For 2022, revenue totalled some $5.4bn, with underlying revenue growth at constant currency coming in at around 8 per cent.

Chief executive Ken Gilmartin said he was pleased that the group had delivered a result for 2022 in line with its expectations at the half year stage, including a return to revenue growth and a balance sheet position that “reflects the strengthened group”.

He told investors: “We are focused on growth in energy and materials, both with structural growth drivers - energy security, energy transition, net zero and the circular economy - which create long term growth opportunities for Wood. Our leading positions in these markets, long-term client relationships and expertise in decarbonisation and digitalisation is enabling us to win additional market share.

“This is a new Wood, led by a new team, and the strategy we recently shared at our capital markets day will enable us to deliver sustainable returns. We have attractive growth prospects in our core markets, we are trusted by our clients, and we have the talent and solutions to enable a net-zero future. We’re focused on designing a strong future for Wood and enter this New Year with positive momentum.”

The sale of the group’s built environment consulting business resulted in a significant exceptional gain on sale of around $600 million in the period.

Stuart Lamont, investment manager at RBC Brewin Dolphin, said: “It has been a tough spell for Wood, with the share price now back at levels last seen in 2005. However, the company has been boosted by some recent analyst upgrades and [these] results highlight a few of the reasons why.

“Revenue continues to grow and debt, a perennial issue for the company in recent years, is coming down, helped by the sale of the built environment operation last year. There are also positives to take from a relatively strong order book. Nevertheless, margins remain under pressure and, given the rising cost of debt, the market will want to see even more action to bring it down. Wood is beginning to turn a corner, but there is still some distance to go.”

FTSE-250 listed Wood Group is an Aberdeen-headquartered energy and engineering services specialist, with operations on and off shore.

At November’s capital markets day, Wood outlined its new strategy and medium-term financial targets, with the focus on “attractive end markets where we are differentiated”. Gilmartin said at the time: “Today is an important moment for Wood as we set out our refreshed strategy. There is huge potential in Wood - we have over 35,000 highly skilled colleagues, long-term client relationships and leading engineering and consulting capabilities. We are now taking a more focused approach to growth.”