John Wood Group expects further revenue and adjusted earnings fall

(Alliance News) - John Wood Group PLC on Tuesday guided for a continued revenue fall as trading in the first ten months of 2022 was in line with its expectations.

John Wood is an energy sector-focused engineering and consulting business based in Aberdeen, Scotland.

It confirmed its full-year guidance. John Wood said it expects annual revenue of between USD5.2 billion and USD5.5 billion, down at least 14% compared to USD6.40 billion in 2021, which itself was a 15% drop from USD7.56 billion in 2020.

In 2021, the company's pretax loss had narrowed by 46% to USD80.6 million from USD148.6 million, as costs were reduced.

John Wood expects 2022 adjusted earnings before interest, tax, depreciation and amortisation around the middle of its guidance range of USD370 million and USD400 million, a reduction of at least 28% from USD554 million in 2021. It added that this estimate includes a hit from recent exchange rate movements of around USD200 million on revenue and USD10 million in Ebitda.

John Wood said it expects adjusted Ebitda margins to be flat in the near term, while anticipating adjusted Ebitda to grow at mid to a high single-digit compound annual growth rate over the medium term.

The company is envisaging solid growth for oil and gas and chemicals while noting "substantial growth potential" for hydrogen and carbon capture. It aims to "significantly" grow its share in minerals and life sciences.

"Our businesses generate strong underlying cash flows and we expect these to continue to grow over the medium term. This, combined with the reducing legacy liabilities, will result in a return to positive free cash flow from financial year 2024 onwards," John Wood said.

On a positive note, the company expects its net debt to be reduced by at least 71% to around USD350 million to USD400 million at December 31 from USD1.39 billion a year prior.

John Wood shares fell 11% to 1422.20 pence each in London on Tuesday morning.

By Tom Budszus; tombudszus@alliancenews.com

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