Wood Group confident of return to growth despite first-half revenue hit

Oil services firm Wood Group has posted a slump in first-half revenues after taking a hit from the pandemic, but stuck by forecasts for a return to growth by the year end.

The Aberdeen-based consulting and engineering firm suffered a 23% slump in turnover to 3.2 billion US dollars (£2.3 billion) for the six months to June 30.

It blamed the ongoing impact from the Covid-19 crisis, as well as a 74 million US dollar (£54 million) loss of revenues from the sale of parts of the business.

This left the group with bottom line losses of 11.4 million US dollars (£8.3 million), against losses of 10.5 million US dollars (£7.7 million) a year ago.

Underlying earnings – the group’s preferred measure – fell 14% to 262 million US dollars (£191 million), in line with recent guidance.

But pre-tax profits rose to 18.4 million US dollars (£13.4 million) from 900,000 US dollars (£656,000) a year earlier

The group held off from paying any interim shareholder dividend as its results continued to show the effects of the pandemic, with revenues set to fall overall in the full-year.

But it struck a confident tone on the outlook and said a solid order book helped it put faith in a return to second-half growth.

Chief executive Robin Watson said: “The first half of 2021 reflects improving momentum in activity in the second quarter and a strong margin improvement, with increased margins in all business units and a greater weighting of high margin consulting activity.

“Trading momentum and good growth in our order book, which is up around 18% year-to-date, underpin our confidence in delivering a stronger second half which will reflect a return to growth compared to both the first half and of 2021 and second half of 2020.”

Wood Group said its order book stood at 7.7 billion US dollars (£5.6 billion) at the end of June.

It added that it has around 3 billion US dollars (£2.2 billion) of its order book due to be delivered in the second half.

Despite the signs of a pick-up in activity, shares in the firm fell more than 3% in morning trading.

Wood Group recently secured the first ever UK Government-backed “green transition loan” in a deal worth £430 million.

Under the agreement, the Wood Group will commit to increasing its clean energy portfolio and significantly reducing its greenhouse gas emissions over a five-year period.