Wood Group sees 19% fall in interim earnings

Wood Group said it expected a 19% fall in first half core earnings as the coronavirus pandemic hammered the oil and gas sector.

The energy industry engineer said adjusted earnings before interest, tax, depreciation and amortisation in a range of $295m - $305m and operating profit before exceptionals of around $80m - $90m. Like-for-like revenue was down around 11%.

The order book at the end of May was $7bn, down about 11% since December 2019, of which about $3.5bn was due to be delivered in 2020, Wood said on Friday, adding that margins contracted by 70 basis points on a like-for-like basis.

"The global engineering and consultancy market is facing unique and unparalleled challenges in 2020 from Covid-19 and volatility in oil prices," said chief executive Robin Watson.

"The relative strength we are seeing in chemicals & downstream, the built environment and renewables, where we will double our revenues in 2020, is helping to mitigate the impact of challenging conditions in upstream and midstream oil & gas."

Wood said it had made taken measures in the second quarter that were expected to deliver more than $200m in full year overhead cost savings.

The company added that it had a strong balance sheet and liquidity and expected a fall in net debt at June 30 from $1.43bn at December 2019 after first quarter disposals.