Oilfield services provider Wood Group suffers $900 million loss
- Wood Group posted an operating loss of $899 million in the six months ended June
- It recorded $966 million in exceptional charges, including an $815 million goodwill write-down
John Wood Group has announced that the company suffered a staggering loss in the first half of the year, just two weeks after a potential buyer backed out of a takeover attempt.
The oilfield services division reported an operating loss of $899m (£691m) for the six months to June, compared with a profit of $23m the year before.
FTSE 250-listed Wood Group posted $966 million in exceptional charges, including an $815 million goodwill write-down as a result of previous acquisitions and higher discount rates due to greater market volatility and higher debt servicing costs.
Big loss: John Wood Group posted an operating loss of $899 million in the six months to June, compared with a profit of $23 million the previous year
An additional $140 million of charges were recorded in connection with the company’s decision to withdraw from one-time turnkey and large-scale engineering, procurement and construction work.
However, Wood Group has stuck to its annual forecast, with adjusted pre-loss earnings (before the impact of divestments) expected to grow by a high single-digit percentage this year.
The order book also rose 3.6 percent to $6.2 billion, thanks to new contracts won by the operating and investment services divisions.
The former segment recently won a $46 million contract from TotalEnergies for gas exploration in Iraq and the North Sea and a six-year contract from Shell for work on a major offshore liquefied natural gas (LNG) facility in Australia.
Ken Gilmartin, CEO of Wood Group, said: ‘Looking ahead, we are confident that our strategy, the actions we are taking and the growth potential in our markets will deliver significant value for our shareholders.
“We are pleased to confirm today our outlook for both 2024 and 2025, including generating significant free cash flow in 2025.”
Dubai-based engineering firm Sidara pulled out of a £1.6bn takeover bid by Wood Group on 5 August, citing “increasing geopolitical risks and uncertainty in financial markets”.
Wood Group incurred about $6 million in costs from the failed bid and expects to earn another $5 million in the second half of the year, but Sidara will be reimbursed for some of the costs.
Last year, the Edinburgh-based company was also the target of a takeover attempt by private equity giant Apollo Global Management.
Apollo made five bids for Wood Group, with the final bid valuing the business at £1.7bn. In May 2023, Apollo withdrew without providing an explanation.
Adam Vettese, market analyst at eToro, said: “Questions will remain after another failed attempt, with shareholders looking for additional returns, which has again failed.”
John Wood Group Shares rose 0.2 percent to 132.8p, losing about 21 percent of their value since the start of the year.
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