Wood Group (WG.) may have seen a slight revenue dip in 2019, but like-for-like adjusted cash profits rose 5 per cent to $704m (£544m) on the back strong organic growth in ‘Asset Solutions Europe, Africa, Asia and Australia’ and the delivery of $60m of cost synergies. Statutory earnings were boosted by a 30 per cent reduction in exceptional charges, although the group is carrying a $46m provision for settlement of regulatory investigations.
Amid more discipline bidding and focusing on completing legacy contracts, the order book contracted by 7 per cent to $7.89bn. Asset Solutions Americas – which account for two-fifths of revenue – is working off its larger downstream and chemicals projects and like-for-like adjusted cash profits there dropped 12 per cent to $199m thanks to $53m of cost overruns and slower US shale activity.
The group has been diversifying away from oil and gas,m and the share of revenue derived from upstream and midstream activities is down to 35 per cent. The 2017 Amec Foster Wheeler acquisition accelerated the shift, but the group is still trying to address the ensuing debt pile. Excluding $574m in lease liabilities, net debt ticked down 6 per cent to $1.42bn, equivalent to two times adjusted cash profits. With the $430m cash proceeds from the sale of its nuclear and industrial services businesses post-period, it has achieved its target leverage of 1.5 times.
Bloomberg consensus places adjusted pre-tax profit at $309m and EPS at 50.9ȼ in 2020, rising to $368m and 58.5ȼ in 2021.
| WOOD GROUP (WG.) | ||||
| ORD PRICE: | 282p | MARKET VALUE: | £ 1.89bn | |
| TOUCH: | 282-283p | 12-MONTH HIGH: | 599p | LOW: 233p |
| DIVIDEND YIELD: | 9.6% | PE RATIO: | 34 | |
| NET ASSET VALUE: | 662ȼ* | NET DEBT: | 45%** | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (ȼ) | Dividend per share (ȼ) |
| 2015 | 5.00 | 139 | 21.4 | 30.3 |
| 2016 | 4.12 | 66.0 | 7.5 | 33.3 |
| 2017 | 5.39 | -21.6 | -7.4 | 34.3 |
| 2018 | 10.0 | 53.5 | -1.3 | 35.0 |
| 2019 | 9.89 | 149 | 10.7 | 35.3 |
| % change | -1 | +178 | - | +1 |
| Ex-div: | 16 Apr | |||
| Payment: | 15 May | |||
| £1=$1.30, *Includes intangible assets of $6.3bn or 939ȼ per share, **Includes lease liabilities of $574m | ||||
