Aberdeen company Wood saw a dramatic collapse in its share price – dropping by more than 60%.
The engineering firm, which employs 35,000 people, saw the freefall when it announced an “urgent” independent review of its books.
Wood’s value fell by £500 million as its shares dropped from Wednesday’s closing price of £1.24 to as low as 49.8p a share.
This comes during a rocky year for the firm as it works to absorb a series of large-scale project write-offs.
Deloitte called in to review write-offs
In its latest trading update, Wood agreed to commission an independent review by big-four auditor Deloitte.
This review will look at “reported positions on contracts in projects, accounting, governance and controls, including whether any prior year restatement may be required.”
These relate to “exceptional contract write-offs” including the “exit from lump sum turnkey and large-scale EPC”.
And are connected to Wood’s hefty near-£750-million loss reported in its half-year report.
However, Wood’s full-year outlook for 2024 remains positive, with “high single digit growth” helped by an expected strong performance in the fourth quarter.
Wood group share price plunges
This is the second major drop in share price for Wood in the space of three months.
It was sparked when Dubai-based buyer Dar Al-Handasah, known as Sidara, walked away from a takeover deal.
Sidara confirmed to Wood it would not be pursuing the acquisition “in light of rising geopolitical risks and financial market uncertainty”.
Wood Group chief executive Ken Gilmartin said: “We continue to make progress on our turnaround, building a simpler, higher quality Wood.
“Our Simplification programme is on-track to deliver annualised savings of circa £42.6m.
“We completed the sale of CEC Controls and agreed the sale of EthosEnergy in the period.
“The increasing quality of our business is evidenced by higher pricing, expanded margins and a higher share of our pipeline from sustainable solutions.”
Net debt for the company is expected to be at similar levels to 31 December 2023 – £530 million.
Wood claims this is subject to the sale of Aberdeen-based EthosEnergy completing by the end of the year.
Actions to redress underperformance
Mr Gilmartin stressed it had been a mixed quarter for group performance.
He added: “We saw strong year-on-year growth in operations and margin expansion in consulting.
“Our projects business delivered a disappointing quarter, impacted by delayed awards in our chemicals business and our continued weakness in minerals and life sciences.
“As such, we continue to take actions to redress this underperformance.
“We have reiterated our full year guidance of high single digit growth in EBITDA and net debt to be broadly flat compared to last year, assuming the sale of EthosEnergy completes by year end.”
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