UK's Wood Group raises profit forecast on contract wins; shares rise

Tue, 22nd Aug 2023 13:09

CFO David Kemp to retire

H1 revenue up 19.7%; core profit rises 12.3%

Order book rises 5% to $6 bln in H1, from Dec-end

Aug 22 (Reuters) - Britain's John Wood Group on Tuesday raised its core profit forecast on contract wins and improved pricing expectations, sending shares in the engineering and consultancy firm up 5%.

The company's projects business posted a 29.6% rise in revenue to $1.25 billion for the six months ended June 30.

Wood has scored major contract wins worth millions of dollars from Shell, Brunei Shell Petroleum (BSP) and GSK.L this year.

Overall, the company closed its order book at $6 billion in the first half, 5% above levels at the end of last year.

"We would expect to see improved margins starting to show some fruit as we get into 2024," CEO Ken Gilmartin said in an interview with Reuters.

The Aberdeen-based company's focus on its sustainable business, which involves providing solutions for decarbonisation, energy transition, and materials for net zero has also been a bright spot. About 20% of first-half revenues came from the segment.

Gilmartin said he expects that one-third of the projects that Wood plans to bid for over the coming 24 months will be for sustainable solutions.

Wood, which operates in over 60 countries, expects adjusted core profit for the full-year to be above its previous expectations while revenue is seen at around $6 billion. The company clocked annual revenues of $5.4 billion in 2022.

Shares were trading up at 155 pence by 1107 GMT, but still well below an offer price of 240 pence that private equity firm Apollo Global had made earlier this year and later abandoned.

Wood took a nearly $5 million charge related to the talks of the deal in the first half, it said.

Separately, Wood announced that its finance chief David Kemp, 53, would retire after an eight-year stint but will remain in the role until a successor is appointed. (Reporting by Anchal Rana and Eva Mathews in Bengaluru; Editing by Rashmi Aich and Conor Humphries)