Wood Group surges as core earnings set to rise

Wood Group surged on Thursday after the oilfield services provider said full-year core earnings were set rise on the year.

In an update for the year to the end of December 2019, the company said earnings before interest, tax, depreciation and amortisation are expected to come in between $850m and $860m, in line with market expectations and up from $693.8m the year before. Operating profit before exceptionals will be around $410m to $420m, also in line with market views.

The group expects revenue of around $10bn, in line with 2018 and reflecting "generally robust" activity. It also said that better-than-expected cash generation in the second half delivered a reduction in net debt to below $1.5bn at the end of December from $1.51bn in 2018.

Wood Group said a stronger second half benefitted from growth in operations work in the Middle East, Caspian and Asia Pacific, and "excellent" execution in Asset Solutions EAAA as well as solid activity levels in built environment markets in Technical Consulting Solutions.

Chief executive Robin Watson said: "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."

At 0920 GMT, the shares were up 8.4% at 401p.