Wood has 2020 debt vision

The group has made net debt a major focus since buying Amec Foster Wheeler in 2017, and even excluding $582m (£479m) in lease liabilities – now part of the balance sheet after changes to accounting standards – net debt went up 14 per cent year on year to $1.77bn, or 2.5 times trailing cash profits. Wood chief executive Robin Watson said the nuclear unit sale would get the company closer to a targeted debt level of 1.5 times cash profits. 

Debt aside, the oil and gas services and construction group may have brought in less revenue in the first half of the year, but the transition through to earnings improved due to 46 basis point increase in the gross margin, together with a sizeable reduction in both administration costs and joint venture impairments.

Management pointed to "improved margins across energy and built environment markets", a reflection of increased activity in upstream oil & gas activities, particularly energy service contracts in North America and the Middle East. Adjusted cash profit increased by 7 per cent, driven by the Asset Solutions Europe, Africa, Asia and Australia segment (ASEAAA), which benefited from "improved delivery and revenue mix”. However, the synergy benefit of $30m for the half was balanced by the one-off post-tax hit of $47m on “cost synergy delivery, investigation support costs and loss on disposal of TNT”. 

Consensus forecasts compiled by Bloomberg put Wood’s full-year cash profits at $905m and EPS at 24.2¢, rising to $984m and 40.2¢ in 2019.