Wood Group EBITDA falls to $185m on poor projects and operations performance

Wood Group shares fell 4.8% to 142.8p in late morning trading on Tuesday after the group announced a 0.4% revenue decline to $2.5 billion in HY1 2022 compared to $2.5 billion the last year.

Wood Group commented its 18% growth in operations revenue and 2% consultancy increases were offset by a 15% expected decline in projects.

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The firm reported a 5.1% fall in adjusted EBITDA to $185 million from $195 million after its consultancy performance was offset by its decline in projects and operations.

Wood Group confirmed an adjusted EBITDA margin decline of 0.4% to 7.2% against 7.6% year-on-year on the back of lower margins in operations and a slightly lower margin in consulting, both offsetting higher margins in projects.

The company highlighted an adjusted diluted EPS decrease of 36% to 5.7c compared to 8.9c on the back of its falling EBITDA and higher finance expenses.

Wood Group mentioned a free cash flow of negative $363 million, including a working capital outflow of $208 million and exceptional cash costs of $102 million.

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“The strong order book gives me confidence for the future but there is a lot more to do on cash generation and this is our top priority. We are developing an updated strategy for Wood that will draw on our core strengths, return us to growth and deliver sustainable free cash flow,” said Wood Group CEO Ken Gilmartin.

“We perform complex work in critical industries and our outstanding technical expertise and strong long-term client relationships position us well for growth across targeted markets. We have the consulting and engineering capabilities to help the world solve the global challenges of energy security, decarbonisation and energy transition. I look forward to sharing our plans at our capital markets day in November.”

“In the meantime, we are focused on our culture and energising our people, performance excellence and strengthening our balance sheet through the completion of the sale of the Built Environment business, which we expect around the end of Q3.”

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