(Alliance News) - John Wood Group on Tuesday reported a widened interim loss as revenue stalled, and said cash generation is its "top priority" going forward.
Revenue for the six months to June 30 edged 0.4% lower to USD2.56 billion from USD2.57 billion a year before.
However, the engineering and consulting firm's pretax loss nearly doubled to USD31.5 million from USD18.4 million as finance expenses rose 19% to USD64.1 million from USD53.9 million.
"Our first half of the year saw strong momentum in activity levels and order book growth but more to do on cash generation. It is encouraging to see the operational momentum in our business, especially the growth in our Projects and Consulting order book," John Wood said.
The company suffered free cash outflow of USD363 million, which included a working capital outflow of USD208 million and exceptional cash costs of USD102 million.
For the full year, John Wood expects revenue to be around USD5.2 billion to USD5.5 billion and adjusted Ebitda around USD370 million to USD400 million.
Revenue in 2021 was USD6.40 billion, so the decline in 2022 would be at least 14%. Revenue had fallen by 15% in 2021 from USD7.56 billion in 2020. Adjusted Ebitda was USD554 million in 2021, down from USD630 million.
The order book stood at USD6.42 billion at the end of the half-year, up from USD6.13 billion a year prior.
"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," said Chief Executive Ken Gilmartin.
He added: "We are developing an updated strategy for Wood that will draw on our core strengths, return us to growth and deliver sustainable free cash flow...I look forward to sharing our plans at our capital markets day in November."
Gilmartin took over as CEO at the start of July, having joined John Wood as chief operating officer in August of last year. Gilmartin replaced Robin Watson, whose departure was announced at the time of the company's 2021 results release in April.
Given its "current elevated levels of debt", John Wood will not recommend any dividends in relation to 2022. The firm will reconsider this in 2023 as the sale of the Built Environment Consulting business promises to "transform" the balance sheet. The division was sold to WSP Global for USD1.9 billion back in June.
Net debt including leases was USD2.16 billion on June 30, up from USD1.78 billion a year before.
John Wood's last payout was in respect of the first half of 2019. A final dividend for that year was pulled due to the onset of the Covid-19 pandemic.
John Wood shares were down 5.2% early Tuesday. They are down 39% over the past 12 months.
Here is what you need to know at the London market open:
----------
MARKETS
----------
FTSE 100: down 0.5% at 7,510.12
----------
Hang Seng: down 1.1% at 19,432.88
Nikkei 225: closed down 1.2% at 28,452.75
S&P/ASX 200: closed down 1.2% at 6,961.80
----------
DJIA: closed down 643.13 points, or 1.9%, at 33,063.61
S&P 500: closed down 90.49 points, or 2.1%, at 4,137.99
Nasdaq Composite: closed down 323.64 points, or 2.6%, at 12,381.57
----------
EUR: down at USD1.9910 (USD0.9964)
GBP: down at USD1.1.1729 (USD1.1787)
USD: soft at JPY137.16 (JPY137.26)
Gold: flat at USD1,736.64 per ounce (USD1,736.39)
Oil (Brent): up at USD96.82 a barrel (USD93.26)
(changes since previous London equities close)
----------
ECONOMICS AND GENERAL
----------
Tuesday's key economic events still to come
0930 CEST Germany flash purchasing managers' index
1000 CEST EU flash PMI
0930 BST UK flash PMI
1100 BST UK CBI industrial trends survey
0855 EDT US retail sales index
0945 EDT US manufacturing and services PMI
1000 EDT US residential sales
1000 EDT US Richmond Fed business activity survey
1300 EDT US money stock measures
1630 EDT US API weekly statistical bulletin
1800 CDT US Fed Minneapolis President Neel Kashkari speaks
----------
Gatwick Airport said passenger demand was 74% of the pre-pandemic level in second quarter of 2022 and 59% in all of the first half. The airport, located south of London, said 13.1 million passengers passed through its terminals in the first half of the year, prompting it to raise its forecast for all of 2022 to 32.8 million passengers. Having restricted passenger numbers in July and August, the airport said it is now "business as usual", and it sees no need to extend the capacity restrictions. Gatwick is 50% owned by France's
----------
BROKER RATING CHANGES
----------
JPMorgan raises Just Eat Takeaway price target to 1,568 (1,544) pence - 'neutral'
----------
JPMorgan cuts AO World price target to 35 (40) pence - 'underweight'
----------
Berenberg raises FD Technologies to 'hold' ('sell') - target 1,900 (1,600) pence
----------
COMPANIES - FTSE 100
----------
BT Group said the UK government will take "no further action" over the increase of Altice UK's shareholding in the telecommunications company. Back in December, Patrick Drahi's Altice lifted its stake in BT to 18% from 12% previously. At the time, Altice confirmed it had no plans to mount a takeover offer and would be bound by that statement under UK takeover rules. In May, BT said it had received notification from the UK secretary of state for Business, Energy & Industrial Strategy saying that the government was exercising its power under the National Security & Investment Act 2021 to investigate the increase in the French company's stake. The act was introduced in January and it allows government ministers to more closely scrutinise approaches by overseas interests. It also means the UK government will be able to impose certain conditions on a takeover or block it. BT, a former state-owned company, is particularly sensitive, as its Openreach arm maintains most of the UK's broadband network.
----------
COMPANIES - SMALL CAP
----------
Luxury fashion company Mulberry said Non-Executive Chair Godfrey Davis plans to step down at the end of September, to be replaced by Andrew Roberts. Roberts is a non-executive director who was appointed to the board in 2002. "He has a broad experience of international property markets, the branded luxury hospitality sector and global financial markets and is currently managing director of Como Holdings (UK) Ltd, a company ultimately owned by Ong Beng Seng and Christina Ong, who also ultimately own Chalice Limited, a 56.2% shareholder in Mulberry," Mulberry noted. Davis, who joined Mulberry in 1987, will remain associated with the company as "life president in a non-board role".
----------
CyanConnode reported a narrowed loss after achieving "record" annual revenue. Revenue for the financial year to March 31 rose to GBP9.6 million from GBP6.4 million the year before - its highest annual revenue to date - with its pretax loss narrowing to GBP1.2 million from GBP2.7 million. "We've been delighted with the results achieved during the financial year being reported, which showed record revenues being achieved, and a positive adjusted Ebitda. FY22 also saw record numbers of modules being shipped and record cash being collected," said Executive Chair John Cronin.
----------
Tuesday's shareholder meetings
Bezant Resources PLC - AGM
Livermore Investments Group Ltd - AGM
Xtract Resources PLC - AGM
----------
By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2022 Alliance News Limited. All Rights Reserved.
Just Eat Takeaw (JET)
FD Technologies (FDP)
Ao World (AO.)
Wood Group (J) (WG.)