Wood Group (WG) stock tumbles on earnings cut
09:14, 12 November 2021
Wood Group confirmed this morning that earnings will come in lower than thought as the pandemic’s economic tail further unfurls. Full-year revenues expected to sit in the $6.6bn to $6.8bn range have been downgraded to $6.4bn.
Shares in the engineering FTSE 250 player plummeted more than 7% to 187p on the news. Wood Group also confirmed a strategic review of its consulting built-environment business.
The review is related to “the challenging market conditions created by the impact of COVID-19”, the company said.
“The scope of the review will consider a range of options to best unlock value from this part of the business for shareholders that Wood believes is not currently being recognised in its market capitalisation,” Wood Group said in its statement.
Pandemic project stress
It added: “It will also assess how best to take advantage of the positive trends and investment opportunities in energy transition and industrial decarbonisation where the company is already a global leader.”
Wood Group chief executive Robin Watson confirmed to analysts in August that the start of the year had been quiet due to investment decisions being put on ice. Its built-environment business is still expected to draw in $1.3bn of gross revenues for the consulting business wing.
The Aberdeen-based company has been cutting its gas and oil exposure by pressing further into renewables. It’s thought around 25% of its revenues now comes from the solar and hydrogen sectors, among others.
Wood Group said it expected better revenues and earnings for the second half of 2021 compared with the first half.
“While we are seeing robust activity in Consulting and Operations, the rate of recovery in Projects has been slower than anticipated largely due to the deferral of activity and awards into 2022,” said the company. Last month Wood Group signed a new $1.2bn five-year credit facility with 16 banks.
Read more: Wood Group reports revenue decline but order book is healthy