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Wood Group expects earnings growth in 2018 after Amec acquisition
Wood Group said it expected modest earnings growth in 2018 as the oilfield services company benefits from a tentative recovery in oil and gas markets and cost savings from the acquisition of Amec Foster Wheeler (AFW).
Operating profit before exceptional items fell 13.1% to $212m (£151m) in the year to the end of December as revenue rose 25% to $6.2bn. Total earnings before interest, tax and amortisation (EBITA) rose 2.5% to $372m.
On a proforma basis, including full-year figures for AFW, EBITA fell 11.1% to $598m. Proforma revenue fell 12% to $9.9bn.
The results were complicated by Wood's acquisition of AFW in October. The company has billed the deal as transformational, giving it a more balanced oil and gas business and the potential for large cost savings and revenue gains.
Wood swung to a net loss of $30m from a profit of $34.4m a year earlier as the FTSE 250 company incurred $165m of exceptional costs, including $67m for the AFW acquisition and restructuring and integration costs of $51m. The £2.2bn takeover of its struggling rival, its biggest acquisition, was designed to reduce reliance on oil and gas exploration markets where customers are limiting spending following the oil price crash.
Wood's legacy business was "relatively resilient" in a difficult oil and gas market, causing earnings and margins to shrink. AFW's trading reflected problems that were evident when Wood bought the business and included delays and cost overruns on fixed price contracts.
Robin Watson, Wood's chief executive, said: "At this early stage we currently anticipate modest EBITA growth in 2018. Expected EBITA growth reflects early stage recovery in certain areas of our core oil & gas market and benefit from the delivery of cost synergies. We have also seen good momentum in contract awards more generally in broader energy and industrial markets in the second half of 2017."