Wood, the Aberdeen-based energy services company, has released its third-quarter trading update, revealing a mixed performance and announcing an independent review of its business practices.
Wood’s revenue for Q3 2024 reached £1,486 million, representing a modest 1% growth compared to the same period last year.
However, the year-to-date (YTD) revenue of £4,330 million was approximately 3% lower than the previous year, primarily due to reduced activity in the Projects business.
Performance by Segment
Consulting: Despite a 9% decrease in Q3 revenue to £163 million, this division managed to expand its margins.
Projects: Faced significant challenges, with Q3 revenue down 2% to £584 million and YTD revenue declining 9% to £1,669 million.
Operations: Demonstrated strong momentum with a 9% increase in Q3 revenue to £652 million.
Independent Review
In response to concerns raised by its auditor, the Board has commissioned an independent review by Deloitte.
This review will focus on reported positions on contracts in Projects, accounting, governance, and controls, including whether any prior year restatement may be required.
The company’s order book stood at £5.4 billion as of 30 September 2024, down from £6.1 billion in late June.
Despite this decline, Wood maintains its full-year outlook, projecting high single-digit growth in adjusted EBITDA before the impact of disposals.
Ken Gilmartin, CEO, said: “We continue to make progress on our turnaround, building a simpler, higher quality Wood.
“Our Simplification programme is on-track to deliver annualised savings of c.$60 million, and we completed the sale of CEC Controls and agreed the sale of EthosEnergy in the period.
“The increasing quality of our business is evidenced by higher pricing, expanded margins and a higher share of our pipeline from sustainable solutions.”
“It was, however, a mixed quarter for group performance. We saw strong year-on-year growth in Operations and margin expansion in Consulting.
“Our Projects business delivered a disappointing quarter, impacted by delayed awards in our chemicals business and our continued weakness in minerals and life sciences. As such, we continue to take actions to redress this underperformance.”
“We have reiterated our full year guidance of high single digit growth in EBITDA and net debt to be broadly flat compared to last year, assuming the sale of EthosEnergy completes by year end.”
Market Reaction
Following the announcement of the independent review and disappointing performance in the Projects segment, Wood’s shares experienced a significant drop, falling by more than 40% in early trading.
As Wood navigates through these challenges and strategic shifts, it remains focused on improving cash flow and reducing exceptional drags, with plans to provide free cash flow guidance for FY25 at its full-year results
