Wood Group pushes towards renewables as order book and profits shrink
John Wood Group PLC said first-half revenues and profits have fallen due to the coronavirus pandemic and the drop in oil prices but that it continued to work and win new contracts.
In a pre-close trading update, the FTSE 250 group said its like-for-like revenues for the half year will be down around 11% and underlying profits (EBITDA) down circa 19% to US$295-305mln.
Given the market conditions, the energy-focused engineer’s tilt from hydrocarbons to renewables is being accelerated by external factors and management efforts.
Upstream and midstream oil activity was down 5% and renewables activity was up 4% in the six months to June 30 and although revenues in the latter are expected to double in 2020 it is still less than a quarter of group revenues.
Between the start of the year and the end of May the order book had fallen 11% to US$7bn, of which around US$3.5bn is due to be delivered this year.
“The global engineering and consultancy market is facing unique and unparalleled challenges in 2020 from Covid-19 and volatility in oil prices,” said chief executive Robin Watson, also hailing US$1.3bn of new orders won in April and May.
He added that as the risk of further delays and postponements persists “we are prepared for a wider range of outcomes depending on activity across our broad end markets” but actions to deliver overhead cost savings of over US$200mln this year and protect profit margins “give us confidence in delivering significantly stronger margins in the second half”.
Source: proactiveinvestors.co.uk
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Published: 19-06-2020
