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Wood Group says “too early” to quantify impact of oil price collapse, coronavirus

Published: 05:16 10 Mar 2020 EDT

Wood Group says its “too early” to quantify impact of coronavirus and oil price collapse

Wood Group Plc (LON:WG.) told investors it is “too early to quantify” the impacts of the COVID-19 coronavirus outbreak and the substantial reduction of oil and gas prices.

The offshore engineering firm, in its financial results statement for 2019, said that it has not yet seen any material impacts of the virus outbreak, meanwhile, it emphasised that its business is diversified with around 35% of revenue coming from upstream or midstream oil and gas operations.

“Our strategy has driven decisive action to align Wood with the significant growth opportunities in energy transition and sustainable infrastructure and we made good progress on portfolio optimisation and the repositioning of our consulting, project and operations service offering in 2019,” said Robin Watson, chief executive of John Wood Group.

He added: “We are confident that from this foundation we are building a differentiated, premium, higher margin business, supported by a continued focus on margin improvement, execution excellence and portfolio optimisation."

Financial results for the twelve months ended 31 December 2019 saw US$9.9bn of revenue with the company describing “generally robust activity” across its energy and built environment businesses.

Wood reported adjusted earnings (EBITDA) of US$855mln and operating profit before exception items came in at US$411mln. Exceptionals totalled US$127mln in 2019, reduced from US$183mln in 2018, and, included US$46mln of provisions related to certain regulatory investigation settlements.

It reported US$73mln of net profit for the year and proposed a final dividend of 23.9 cents per share, taking the year’s total dividend to 35.3 cents.

In the first quarter of the current financial year Wood completed the sale of its nuclear and industrial services businesses to bring in US$430mln of proceeds.

Wood noted, in its outlook, an order book of US$7.9bn and described its visibility on new orders as “typical for this point in the year”.

The company added that its forecasts and order book support “modest” underlying revenue growth and growth in underlying earnings, helped by margin improvements in the business.

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