Aberdeen energy services giant Wood points to 'significant potential' as order book builds

In a trading update, Wood said adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) were up 4 per cent, with margin expansion across all of its business units offsetting lower revenue. First-quarter revenue came in at just over $1.35bn (£1.08bn), down 6 per cent, with growth in the operations side offset by lower revenue in projects. The order book stood at $6.2bn, as of the end of March, up 9 per cent on a year earlier.

Chief executive Ken Gilmartin, said: “We are now in the second year of our growth strategy and are making good progress. We continue to win exciting and complex work across energy and materials, with sustainable solutions representing 40 per cent of our pipeline.

“We are progressing with our simplification programme and have made some significant appointments this year including welcoming Arvind Balan as our new chief financial officer. I am proud of the strong leadership team we have in place and confident that we will deliver on our significant potential. We are today reiterating our Ebitda guidance for 2024 and our outlook for 2025.”

John Moore, senior investment manager at RBC Brewin Dolphin, noted: “Yesterday’s announcement of another rejected bid for Wood was an interesting set up for today’s trading update - particularly in the context of previous private equity bids and shareholder unrest. What unites recent events surrounding the company is the belief that a smaller, slimmed down structure is what will help Wood achieve its full potential.

“Today’s update shows some progress in that direction, and the management team is patiently trying to work that out for the company to make sure it is maximising value - while other parties see speedier change as critical. As ever, the truth is likely to be somewhere in the middle.

“Estimates point to an improving earnings picture and Wood’s simplification programme is uncovering savings, but there is more that could be done - regardless of where the company’s future lies.”

On Wednesday, Wood said it had rejected a share buyout proposal from Dubai-based engineering and consulting firm Sidara, which it received last month. It said the proposal was received on April 30 and proposed an offer price of 205p per share - valuing Wood at just over £1.4bn.

It added: “The board carefully considered the proposal, together with its financial advisers, and concluded that it fundamentally undervalued Wood and its future prospects. Accordingly, the board rejected the proposal unanimously on May 8. There can be no certainty that any offer will be made for the company, nor as to the terms of any such offer, should one be made.”

The development came after US private equity suitor Apollo Management dropped its proposed takeover of Wood last May. Apollo had put forward a series of bid proposals, with the last one for 240p a share in cash, valuing the Scots group at almost £1.7bn. Its shares have had a rocky rise since.