(Alliance News) - John Wood Group PLC on Friday said it remains focused on protecting margins after predicting a drop in first half revenue and adjusted earnings due to the "unique and unparalleled challenges" faced by the oil market from the Covid-19 pandemic.
The Aberdeen, Scotland-based company expects to report revenue for the six months to June 30 of USD4.1 billion, down 14% from USD4.79 billion a year ago.
Adjusted earnings before interest, tax, depreciation and amortisation is estimated between USD295 million and USD305 million, with operating profit before exceptional items to be around USD80 million to USD90 million.
Adjusted Ebitda in the first half of 2019 totalled USD314 million and operating profit before exceptional items amounted to USD160 million.
On a like-for-like basis, the FTSE 250-listed company expects first half revenue to be down around 11% and adjusted Ebitda 19% lower, with margins down 70 basis points.
Net debt at June 30 is anticipated to reduce from USD1.43 billion at 2019-end following disposals in the first quarter of 2020.
Chief Executive Robin Watson said: "The relative strength we are seeing in chemicals & downstream, the built environment and renewables, where we will double our revenues in 2020, is helping to mitigate the impact of challenging conditions in upstream and midstream oil & gas," John Wood said.
John Wood said it remains focused on protecting margins in line with its strategic objectives but remains prepared "for a broad range of outcomes on activity".
The company, in order to focus margins, has taken several actions including salary reductions, headcount cuts and overhead cost cuts which is likely to deliver savings of USD200 million in 2020.
John Wood's order book at the end of May stood at USD7.0 billion, down 11% since December 2019, of which USD3.5 billion is due to be delivered in 2020. During April and May, the company secured new orders worth USD1.3 billion.
"Typically, around 80% of our full-year revenues are either delivered or secured at this point in the year. However, in 2020 the risk of further delays and postponements persists and we are prepared for a wider range of outcomes depending on activity across our broad end markets. Our completed actions to protect margin give us confidence in delivering significantly stronger margins in the second half," John Wood said.
Shares in John Wood were up 1.2% at 229.70 pence each in London on Friday morning.
By Tapan Panchal; tapanpanchal@alliancenews.com
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Wood Group (J) (WG.)