By Ian McConnell
ABERDEEN oil services company Wood has flagged an expected 19 per cent fall in underlying first-half earnings, while highlighting the benefits of its diversification drive.
Chief executive Robin Watson underlined “unique and unparalleled” challenges presented by the Covid-19 coronavirus crisis and oil-price volatility but flagged continuing contract wins and execution of work amid the disruption.
Wood noted its recent success in winning contracts from pharmaceuticals group GlaxoSmithKline and the US Navy. It also flagged onshore wind and solar contract wins.
READ MORE: Ian McConnell: Whatever next from Boris on Brexit? A Tony the Tiger roar?
It said, on a like-for-like basis adjusting for the disposals of its nuclear and industrial services businesses in the opening quarter of 2020, revenues in the six months to June would be down around 11% on the same period of last year. It said this demonstrated resilience of demand for its services “across a diverse market footprint”.
Wood noted, reflecting “macro challenges”, the fall in first-half revenues “was heavily weighted to the second quarter”. It said revenue in the second quarter was expected to be $2 billion. Wood noted first-half revenue included “increased renewables activity and relatively robust activity in [the] chemicals and downstream and built environment markets”.
READ MORE: Ian McConnell: Conservatives will be judged on unemployment misery from coronavirus crisis so they had better listen
It added that adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) would, on a like-for-like basis, be down around 19%,, citing the benefit of actions to protect margins.
Wood said that, on a reported basis, revenue would be around $4.1bn, adjusted EBITDA would be around $295 million to $305m, and operating profit before exceptionals would be around $80m to $90m.
Mr Watson said: “The relative strength we are seeing in chemicals and 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 and gas.”
Wood said its order book at the end of May was $7.0bn – down around 11% since December 2019 – of which around $3.5bn is due to be delivered in 2020.
Mr Watson said: “The global engineering and consultancy market is facing unique and unparalleled challenges in 2020 from Covid-19 and volatility in oil prices. The safety of our people, clients and suppliers remains our top priority through this period. Despite the disruption, we are continuing to successfully win and execute work, supported by our strategy of broadening the business across the global energy market and the built environment."
Shares in Wood dipped by 2.6p or 1.1% to 224.3p in the wake of the trading statement.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel