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Aberdeen energy firm Wood suffers £756m loss after takeover snub

The new financial results follow a collapse in the company's share price after a prospective buyer pulled out of a takeover.

Wood headquarters in Aberdeen's Altens Industrial Estate. Image: Kenny Elrick/DC Thomson
Wood headquarters in Aberdeen's Altens Industrial Estate. Image: Kenny Elrick/DC Thomson

Aberdeen-headquartered Wood has revealed it slumped to a £756 million half year loss.

It comes just weeks after takeover bid by Dubai-based engineer Dar Al-Handasah, known as Sidara, collapsed.

Despite the latest results chief executive Ken Gilmartin said it showed “continued progress”.

The firm said revenues of £2.1bn ($2.8bn) were down 5% in the six months to June 30.

‘Continued progress on turnaround’

Wood said this reflected the “strategic shift” away from engineering, procurement, and construction (EPC) work leaving behind “lump sum turnkey and large-scale EPC work” and instead is focusing on “exciting and complex” work.

The firm said the loss includes exceptional charges of £743m, including a £626m impairment charge and a £107m loss to exit contracts.

Mr Gilmartin said: “These results demonstrate continued progress on our turnaround.

“Our strategy continues to deliver higher earnings before interest, taxes, depreciation, and amortization and a larger order book, and we are improving the quality of our business with better pricing and higher margins.

Ken Gilmartin, chief executive, Wood. Image: SCDI

“Our simplification programme is progressing at pace, with nearly half of the annualised $60m savings from next year already secured.

“We have finalised our views on our exit from lump sum turnkey and large-scale EPC work and have reflected this in our results today, though crucially this has not changed our cash guidance.

“We have also recognised a non-cash goodwill impairment in our projects business, which relates to legacy acquisitions.”

Sidara takeover collapse

The results come just weeks after the Sidara deal collapsed causing the firm to see £450m wiped from its value after the share price plunged.

Sidara made four bids but confirmed to Wood it won’t be pursuing the acquisition “in light of rising geopolitical risks and financial market uncertainty”.

Wood said it incurred £4.2m of costs related to these proposals in the period to 30 June 2024 and another £3.8m since then.

However, it said this will be partially reimbursed by Sidara.

Wood was also the subject of a buyout approach by private equity firm Apollo last year, worth £1.68 billion, or 240p per share, which it also rejected.

Confidence moving forward despite loss

Mr Gilmartin noted Wood is well placed to “deliver significant value for shareholders”.

He said: “Generating sustainable, strong free cash flow continues to be an important focus for the delivery of our turnaround.

“Our adjusted operating cash flow was up in the period, and we continue to anticipate reducing cash drags going forward.

“We welcomed Arvind Balan as our new CFO in April and he has brought a renewed cash focus across the business.

“As we look ahead, we remain confident that our strategy, actions we are taking and growth potential across our markets will deliver significant value for our shareholders. We are pleased to reconfirm our outlook today, both for 2024 and 2025, including generating significant free cash flow in 2025.”

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