Wood Group ends year in line with guidance

John Wood Group said in an update on Thursday that its results for 2022 were in line with guidance for revenue, adjusted EBITDA and net debt.

The FTSE 250 company reported “strong” underlying revenue growth in the 12 months ended 31 December, led by operations and consulting, with a return to growth in the second half in projects.

Its order book stood at $6bn (£4.94bn), including “strong growth” in projects, while around 22% of group revenue was from ‘sustainable solutions’.

Wood Group said revenue totalled around $5.4bn for the year, with underlying revenue growth at constant currency coming in at around 8%.

Reported revenue was ahead 3%, including an adverse impact of around $275m from foreign exchange rate movements.

Growth in consulting and operations was offset by the expected full-year decline in projects, the board said.

Adjusted EBITDA was between $375m and $385m, in line with guidance, and including an adverse impact of around $15m from foreign exchange rate movements.

The company’s adjusted EBITDA margin was about 7.1%, down from 7.7% year-on-year.

That included the impact of the previously-guided lower margin in operations, and a lower margin in consulting that partly reflected the impact from exiting work in Russia.

Net debt, excluding leases, at year-end on 31 December totalled around $350m to $400m, within Wood’s guided range.

Looking ahead, Wood Group said it expected its guidance for the 2023 financial year to be in line with its medium-term financial targets of adjusted EBITDA growth at mid-to-high single digit compound annual growth rates, with momentum building as its strategy delivered.

As it previously set out, the company was anticipating a “material improvement” in underlying operating cash flows in 2023, outweighed in the short-term by defined payments on legacy liabilities, before a return to positive free cash flow in 2024.

“We are pleased to have delivered a result for 2022 in line with our expectations at the half year, including a return to revenue growth and a balance sheet position that reflects the strengthened group,” said chief executive officer Ken Gilmartin.

“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.”

Gilmartin said “significant” contracts won in the second half included a five-year engineering services contract renewal with BP, a three-year contract renewal with Shell in the UK North Sea, and a four-year contract with Ineos to deliver a “state-of-the-art” petrochemicals complex in Belgium.

“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.”

Wood Group said it would report its full-year results for the year ended 31 December on 28 March.

At 0805 GMT, shares in John Wood Group were down 0.99% at 144.56p.

Reporting by Josh White for Sharecast.com.