Aberdeen energy services giant Wood on track for stronger core earnings

Robin Watson says the firm is making good progress on portfolio rationalisation. Picture: Contributed

Energy and engineering services group Wood is expecting higher core earnings with a strong performance from its engineering services business offsetting cooling onshore drilling demand in the US.

The Aberdeen-headquartered group said in a trading statement that adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) are expected to be between $850 million (£650m) and $860m for the year to the end of December 2019, compared with $693.8m a year earlier.

Chief executive Robin Watson told investors: “Our full-year 2019 results will demonstrate earnings growth, margin improvement and strong operational cash generation, resulting in a reduction in net debt.

“In Q4 we outlined our clear strategy to focus on higher margin project management, operations and consulting activities and announced the formation of our Technical Consulting Solutions business.

“We also continue to make good progress on portfolio rationalisation. Looking ahead, our business is well positioned across its energy and built environment markets and we expect to deliver earnings growth in 2020.”

The group, which operates in more than 60 countries, employing some 60,000 people, said it expects revenue of about $10bn for 2019, in line with the previous year, reflecting “generally robust activity”.

David Barclay, head of office at Brewin Dolphin Aberdeen, said: “It’s been a challenging 12 months for Wood, with a volatile oil and gas environment seeing the company – along with other services firms – squeezed by some of the larger operators.

“Wood’s management has taken some positive steps to re-position the business,” he added.