Wood Group sees adjusted FY earnings down 22%

Energy services company Wood Group said it expected full year core earnings to fall by a fifth amid the Covid-19 pandemic and slumping oil price.

Adjusted earnings before interest, tax, depreciation and amortisation were expected to fall 22% to $620m - $640m, the company said on Thursday, with adjusted BITDA margin of 8.2% - 8.4%. Operating profit before exceptionals was forecast at $215m - $235m.

On a reported basis, revenue will be around $7.6bn, Wood said. On a like for like basis, adjusting for the disposals of the nuclear and industrial services businesses in 2020, revenue will be down around 20% on 2019.

“The protection of our margin in a challenging environment reflects our focus on maintaining operational utilisation at high levels and the flexibility of our business model which enabled overhead reductions of $230m in the year,” the company said.

“This was partially offset by cost overruns and delays, including those as a result of Covid-19, on a small portfolio of energy projects in our ASA Process and Energy business.”

Wood said it order book had fallen 22% since December 2019 and stood at $6.2bn at the end of November, with more than 60% due to be delivered in 2021.

“Whilst the ongoing impacts of Covid-19 remain uncertain, we have seen some signs of markets stabilising with order book reflecting our expectation of continued strength in the built environment and resilience in renewables & other energy markets,” the company said.

“However, the risks of downward scope variations and deferrals we flagged at the half year are evident in delays to larger project awards in upstream oil & gas and some deferrals of investment decisions in chemicals & downstream.”