Wood Group (LON:WG) chief executive Ken Gilmartin shrugged off a £754million loss in the first half of the year as he confirmed the company has booked more and profitable business.
Gilmartin insisted the results in the six months to the end of June were “good” and the bottom line loss was a “one-off” as the firm booked non-cash impairments on old contracts largely taken on in its acquisition of Amec Foster Wheeler in 2017.
With the arrival of new chief financial officer Arvind Balan, he said now was a “good time to correct that”.
“That was a one-off correction that we needed to make and it was the right time to do it.”
He said Wood was 18 months through its three-year transformation strategy.
He said: “We are growing profitably, and the story for Wood has been a story of transformation.”
The “big thing” for Wood in 2025 will be the company’s return to free cash flow, he said. “That’s it. That is the big thing that we need to deliver on and that is going to be 2025. That will be the big inflection point for us we complete the turnaround.”
He added the Aberdeen-based firm was “confident and committed we are going to do that”.
In its first update from the group since Sidara’s bid to buy Wood collapsed causing the firm’s share price to plunge, he denied suggestions that the board had been distracted in handling unsolicited proposals to buy the business.
In the results Wood said the Lebanon firm, also known as Dar Al-Handasah Consultants Shair and Partners Holdings Limited, had made four unsolicited proposals to acquire Wood before walking away from the bid due to “rising geopolitical risks and financial market uncertainty”.
“Generally as you are going through these kind of Sidara approaches it is a very small number of people in the centre of the business that are engaged in due diligence,” said Gilmartin. “The vast majority of the people that we have are absolutely focused on winning work and doing really good work for clients.”
He said Wood was a publicly-listed company so he couldn’t rule out further bidders emerging as the firm was viewed as valuable.
This view was backed John Moore, senior investment manager at RBC Brewin Dolphin, who noted “there was a reason Wood attracted so many bids at a significant premium to its current share price”.
Gilmartin said: “People continue to see the value of who we are in Wood – how critical we are to the various industries and clients we serve, the complexity of the engineering, the high skills, there’s always something that could happen there.
“But the bit for us right now is continue to go on the journey we are on…. And continue to attract new investors. It is the new investors that are going to continue to push the share price as we convince more people on the journey.”
He said he would not “second guess” any targets for recovery in the firm’s share price.
“Are we happy where the share price is now? Of course not. Are we working hard to change that? Absolutely. Are we going to continue to do what we said we were going to do in order to increase and attract and bring in new investors? For sure.
“But the important thing for us as a company is continuing to deliver on that we said we would deliver. Under promise, over deliver.”
He added: “We become the company that has always done that, the share price looks after itself.”
Wood’s share price closed 1.4% higher to 134.5p. This was down significantly from a peak 213.20p before Sidara decided against buying the firm.
Thanks, Aberdeen
To the firm’s staff in its Aberdeen headquarters, Gilmartin offered “heartfelt thanks”.
He said: “This company is made up of some of the most brilliant, fantastic, creative, dedicated people on the planet.
“In Aberdeen, there wouldn’t be a Wood without all of that hard commitment and courage our people show every day. They are fantastic, they’re incredible. Keep pushing.”
Half year update
The firm said revenues of £2.15bn were down 5%, with growth in operations offset by lower revenue in projects.
It maintained its full year guidance and expects full revenues of around £4.6bn.
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