Wood Group, the engineering services provider headquartered in Scotland, has raised the outlook for its full financial year following a string of new contract wins that chief executive Ken Gilmartin hinted would continue in the coming months.
Shares in the FTSE 250 group closed yesterday's trading higher after Wood said its core adjusted earnings for the full year are forecast to be "ahead of our previous expectations". The company, which is eight months into a three-year growth plan, now anticipates annual revenues of about $6 billion (£4.7bn) against a previous forecast of $5.7bn.
This was despite a drop in first-half operating profits which were hit by costs linked to a failed takeover approach by Apollo Global Management and a $20m write-down on the closure of Wood's industrial, engineering and construction business.
READ MORE: Wood Group: Order book up as CEO says 'We are winning'
"We are really about building on the position that we have, and looking at our trading performance you are seeing that is starting to bear fruit and we are building momentum there," Mr Gilmartin said.
"This is a turn-around story that we have, and I think what you're going to see is that inflection point we have seen from a trading standpoint also starting to pass into our statutory results as well."
He added: "In terms of any other large wins outside of the ones that we have in the outlook, they are probably not ones that we want to highlight here too much. What I would say is that we are continuing to win work, and watch this space in the next couple of weeks because as a company we're growing and we're winning in the right markets."
Wood was the subject of five takeover approaches from Apollo before the US private equity group abandoned its solicitations in May. Its final offer had valued the business at £1.7bn, or 240p per share.
Wood said its costs related to the Apollo saga amounted to $5m.
Sales in the group's projects division jumped by 29.6% to $1.25bn during the six months to June 30 on robust demand from the chemicals and oil and gas sectors. This was partially offset the run-down of lump sum turnkey activity.
The division secured a major engineering services contract with Euro Manganese and a life sciences engineering deal from GSK worth approximately $50m.
The latter contributed to the growing level of revenues from "sustainable" project work as Wood seeks to diversify away from its traditional roots in the oil and gas sector. More than a third of contracts that Wood is currently in the process of bidding for are "sustainables" across projects such as biofuels, carbon capture and storage, and blue hydrogen.
READ MORE: Scotland: Sorry tale as yet another company, Wood, faces takeover
Analyst Alex Smith of Investec said steady revenue improvement during the past 12 to 18 months demonstrates "solid momentum" within the business.
"Wood is demonstrating strong signs of progress on its growth strategy it outlined in November last year," he said. "Importantly, the company is winning significant contracts in its key growth markets and is confident in delivering its medium-term ambitions, including returning to positive [free cash flow] in FY24."
Mr Gilmartin added: “When we announced our growth strategy in November last year, we set out a plan for Wood to deliver on its significant potential, and I am delighted that our results show the clear progress we are making. We have made a good start to the year, delivering growth in revenue, EBITDA, headcount and our pipeline, all while furthering our inspiring culture, as evidenced by our highest-ever employee net promoter score.
“As we look ahead, we are confident that our actions, the business model we have implemented and the market growth opportunities to which we have aligned, support the momentum we are building in our business. As such, we are increasing our full year guidance for the year for revenue and EBITDA.”
Wood also announced that chief financial officer David Kemp is to retire, with a process now underway to appoint his successor. Shares in Wood closed yesterday's trading 6.1p higher at 154.2p.
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