Wood Group's new boss gives confident outlook as order book builds nicely

Wood, the Aberdeen-headquartered global energy and engineering services group, has hailed the strength of its order book even as soaring commodity prices were not reflected in first-half numbers.

Operating profit before exceptional items fell by 8.9 per cent to $41 million (£35m) in the six months to June 30, compared with a year earlier. Revenue from continuing operations dipped 0.4 per cent to just over $2.56 billion.

However, the group, which is on the verge of completing a major restructuring, boosting its finances, said its order book had risen almost 5 per cent to more than $6.4bn.

Wood operates in more than 60 countries and employs some 40,000 people and is in the process of selling its “built environment” consulting arm to WSP Global, with the deal due to close towards the end of the third quarter.

Ken Gilmartin became the new chief executive of Aberdeen-headquartered Wood in July.

Irish-born Ken Gilmartin, the firm’s new man at the helm, said he was pleased with where the company was at and the disposal would provide an opportunity to “reset the balance sheet”.

He added: “Since becoming CEO in July, I have been really encouraged to see the improving operational momentum across our business, including some great client wins. The strong order book gives me confidence for the future but there is a lot more to do on cash generation and this is our top priority.”

Adam Vettese, analyst at social investment network eToro, noted: “The first six months of the year has been nothing to write home about for Wood, with the firm lower on nearly all key metrics. Revenue, earnings and free cash flow are all down, while its net debt is up.

“While that is disappointing, the fact its order book is 5 per cent higher than it was a year ago provides some hope of improved performance. Plus the firm itself is predicting a stronger second half.

“It might surprise shareholders that Wood has not been able to capitalise on the rocketing price of oil and gas over the past year. However, reading new CEO Ken Gilmartin’s words in this latest update, it feels like this is a firm that is very much in transition.”