Wood Group Q1 EBITDA rises but revenues fall

Wood Group posted a rise in first-quarter EBITDA but a drop in revenue on Thursday, a day after saying it had rejected a £1.4bn takeover proposal from Dubai-based Sidara.

In a trading update for the quarter to the end of March, the engineering services firm said adjusted earnings before interest, tax, depreciation and amortisation were up 4%, with margin expansion across all of its business units offsetting lower revenue.

The margin performance was helped by improved pricing and the company’s strategic focus "on building a higher quality business", with its move away from EPC work.

Revenue during the period fell 6% versus the first quarter of 2023 to $1.5bn, with growth in Operations offset by lower revenue in Projects. This mainly reflected lower pass-through activity and lower EPC revenue in line with its strategic shift.

Meanwhile, the order book stood at $6.2bn at the end of March, up 9% compared to March 2023.

Chief executive Ken Gilmartin said: "We are now in the second year of our growth strategy and are making good progress, with EBITDA growth, margin expansion and an order book 9% higher than a year ago. We continue to win exciting and complex work across energy and materials, with sustainable solutions representing 40% of our pipeline.

"We are progressing with our Simplification programme and have made some significant appointments this year including welcoming Arvind Balan as our new CFO. I am proud of the strong leadership team we have in place and confident that we will deliver on our significant potential. We are today reiterating our EBITDA guidance for 2024 and our outlook for 2025."

The trading update came a day after Wood Group announced that it had rejected a 205p a share takeover proposal from rival Sidara, which values the company at more than £1.4bn.

Wood said the offer "fundamentally undervalued" the group and its future prospects.