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UK oil engineering company Wood Group raised its full-year revenue and earnings expectations on Tuesday after winning a series of new contracts, even as it saw a 26 per cent drop in first-half operating profits.
Wood Group boosted revenue by almost a fifth year on year to $3bn on a constant currency basis following “significant contract wins” across its energy and materials business units.
The company is now expecting annual revenues of about $6bn, up from a forecast of $5.7bn, after boosting orders and seeing strong demand in its carbon capture and hydrogen business.
Wood is now expecting adjusted earnings before interest, tax, depreciation and amortisation to be “ahead of our previous expectations and within our medium-term target of mid to high single-digit growth”, it said in the update on Tuesday.
The upgrades come in spite of a drop in operating profits due to costs incurred in relation to the abandoned takeover bid by US private equity group Apollo, and a $20mn writedown for its power and industrial engineering, procurement and construction business, which closed last year. Wood’s operating profits fell to $23mn in its first half, down from $31mn in the same period last year.
In May, after a four-month pursuit and five preliminary bid offers, US-based Apollo walked away from its bid to acquire Wood at 240p per share, which valued the London-listed company at about £2.2bn including debt.
Apollo declined to state why it eventually decided not to make a firm offer for the Scottish company, but a person close to the buyout group said at the time that, after further examination, the New York-based fund manager had concluded a deal was not worth pursuing at the current offer price.
Wood said on Tuesday it had scored a $250mn contract extension in south-east Asia in the first half of the year to deliver brownfield engineering services.
It also struck a deal with oil company Shell to provide “expertise in decarbonisation, digitalisation and asset life extension” and agreed a $50mn life sciences engineering contract with pharmaceutical and biotechnology company GSK.
Chief executive Ken Gilmartin said: “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.”
Wood also announced that chief financial officer David Kemp would retire after eight years in the role. Kemp, who joined Wood in 2013 as CFO of what later became part of Wood’s operations business unit, joined the group’s board in January 2015 and was appointed CFO in May 2015. He will remain in the role until a successor is appointed.
In early trading on Tuesday, Wood’s shares rose about 4 per cent to 154.10p, below the 240p offered by Apollo in May.