By Scott Wright

ABERDEEN-based Wood has returned to revenue growth and flagged its expectations of a strong second half, sending shares up seven per cent.

The engineering services giant reported revenue of around $3.2 billion for the six months ended June 30, with the company noting that strong growth in consulting and operations had been partially offset by a decline in its projects division.

And it highlighted the strength of the company’s order book, which it said was up 18 per cent year-on-year and 5% for the year-to-date. The value of the order book stood at around $8.1 billion on May 31, with Wood stating that its continuing growth supports its expectation of a stronger second half across all business units.

Wood signalled it expects to return higher revenue for 2022, after its results for 2021 showed that revenue had fallen by 15.4% to $6.4bn. That came as it narrowed losses to £136m from £228m amid the continuing impact of the pandemic, “mixed market conditions” and ongoing challenges in its projects division.

The first half of this year has proved to be eventful for Wood, which employs around 40,000 people in more than 60 countries. On June 21, it was announced that Ken Gilmartin, who joined the company as chief operating officer in August last year, had been appointed to succeed chief executive Robin Watson. Mr Watson, who stepped down after seven years at the helm, had led Wood through its transition from a business focused on North Sea services into a global operation with interests in a wider range of energy and industrial markets.

Earlier in June, the company had announced that it sold its built environment business to WSP Global Inc for $1.9 billion (£1.5bn) in a move it said would “significantly reduce” its leverage and deliver value for shareholders, while raising the prospect of its dividend being restored. The division, which employs around 6,000 of its 7,000 workers in the US and Canada, had been put up for sale in November following a strategic review. The deal has still to receive regulatory approval.

Wood reported adjusted underlying profits of around $250m for the first half, boosted by revenue growth of about 17% to £1.2bn in operations. That division benefited from stronger market conditions in conventional energy, especially in Europe and the Middle East.

The consulting business saw revenue rise by around 3% to $0.9bn, but projects’ turnover dipped by about 15% to around $1bn. Wood said this partly reflected “the subdued market for large-scale investment and the impact of our move away from large-scale fixed price work”, though expects revenue to improve in the second half.

Mr Gilmartin, whose career included a 15-year spell with Jacobs before joining Wood, said: “It is encouraging to see the improving operational momentum in our business, especially the growth in our projects order book, supported by a backdrop of strong market demand for our engineering solutions.

“While our debt remains high, the sale of the built environment consulting business will restore the financial flexibility necessary to deliver our strategy, and we are making good progress towards completion in the second half.

“While we are mindful of the current global macro uncertainty, we have an exciting future in front of us across the global energy market, addressing both security and sustainability. We have the people and skills to capture the opportunities ahead and deliver sustainable free cash flow. I look forward to saying more on our plans at our half year results, and in detail at a capital markets day in late Q4.”

Wood highlighted a range of contract wins that it had secured in the first half. These include a 10-year engineering and project support agreement with Chevron to work on offshore and onshore assets around the world within the upstream, midstream and downstream markets, and a two-year contract with Solvay to deliver a new polyvinylidene fluoride (PVDF) site in France. The company described PVDF as a high-performance polymer that is key to meeting growing demand of lithium-ion batteries for electric and hybrid vehicles. Wood said the plant would be the largest of its kind in Europe when complete.

The company also said it had secured a major contract extension with Equinor to provide maintenance, modifications and operations solutions to its assets in the Norwegian Continental Shelf in the North Sea until 2026.

Shares closed up 10.2p at 152.85p.