TIDMWG.
RNS Number : 4604M
Wood Group (John) PLC
12 January 2023
Full year trading update
12 January 2023
2022 Trading In Line With Expectations
John Wood Group PLC ('Wood' or 'the Group') announces a trading
update for the year ended 31 December 2022 ('FY22'), including the
headline draft financial results.
Highlights
-- Delivering financial returns
o Results for FY22 in line with guidance for revenue, adjusted
EBITDA and net debt
o Strong underlying revenue growth in 2022, led by Operations
and Consulting with a return to growth in H2 in Projects
-- Transformed the Group
o Financial strength restored following the sale of Built
Environment business in September 2022
o Legacy issues addressed including Enterprise litigation
settled in November 2022
o Business de-risked with minimal lump sum turnkey (LSTK)
work remaining
-- Well-positioned for market growth
o Order book of c.$6 billion including strong growth in
Projects
o Around 22% of Group revenue from sustainable solutions(1)
FY22 financial highlights
-- Revenue around $5.4 billion : underlying revenue growth
at constant currency of around 8%. Reported revenue up 3%,
including an adverse impact of around $275 million from
foreign exchange rate movements. Growth in Consulting and
Operations was offset by the expected full year decline
in Projects
-- Adjusted EBITDA around $375 million to $385 million : in
line with guidance and includes an adverse impact of around
$15 million from foreign exchange rate movements
-- Adjusted EBITDA margin around 7.1% compared to 7.7% last
year. This includes the impact of the previously guided
lower margin in Operations, and a lower margin in Consulting
that partly reflects the impact from exiting work in Russia
-- Net debt (excl. leases) at 31 December 2022 around $350
million to $400 million(2,3) - within our guided range
-- Order book at 31 December 2022 of around $6 billion with
the order book for delivery in 2023 up by around mid to
high single digit percentage on the position a year ago
Outlook for FY23
As usual, we will give financial guidance for FY23 alongside our
full year results on 28 March 2023. We expect guidance for FY23 to
be in line with our medium-term financial targets of adjusted
EBITDA growth at mid to high single digit CAGR, with momentum
building as our strategy delivers.
As previously set out, we anticipate a material improvement in
underlying operating cash flows in 2023 which will be outweighed in
the short term by defined payments on legacy liabilities, before a
return to positive free cash flow in 2024.
Ken Gilmartin, CEO, said:
"We are pleased to have delivered a result for 2022 in line with
our expectations at the half year, including a return to revenue
growth and a balance sheet position that reflects the strengthened
Group.
"We are focused on growth in energy and materials, both with
structural growth drivers - energy security, energy transition, net
zero and the circular economy - which create long term growth
opportunities for Wood. Our leading positions in these markets,
long-term client relationships and expertise in decarbonisation and
digitalisation is enabling us to win additional market share.
"Significant contracts won in the second half of the year
include a five-year engineering services contract renewal with bp,
a three-year contract renewal with Shell in the UK North Sea, and a
four-year contract with INEOS to deliver a state-of-the-art
petrochemicals complex in Belgium.
"This is a new Wood, led by a new team, and the strategy we
recently shared at our Capital Markets Day will enable us to
deliver sustainable returns. We have attractive growth prospects in
our core markets, we are trusted by our clients, and we have the
talent and solutions to enable a net-zero future. We're focused on
designing a strong future for Wood and enter this New Year with
positive momentum."
Trading across businesses
Consulting saw revenue growth of around 4% to around $0.6
billion with continued growth in our solutions across both
conventional energy and energy transition.
Adjusted EBITDA was around 9% lower at around $70 million. This
reflects a lower margin of c.11.3% compared to c.13% last year,
reflecting a weaker performance in Applied Intelligence, the impact
of exiting high-margin work in Russia and some cost pressures from
staff retention and recruitment.
Projects saw a decline in revenue of around 7% over the year to
around $2.2 billion. The business returned to revenue growth in the
second half of the year, with growth coming from our services-led
approach following our strategic decision to move away from riskier
LSTK work.
Adjusted EBITDA was slightly higher at around $170 million with
a strong margin improvement of c.0.7 percentage points as overall
project performance improved.
Operations saw revenue growth of around 14% to around $2.4
billion, partly reflecting continued higher activity from stronger
market conditions in conventional energy, especially in Europe and
the Middle East. Revenue growth was also helped by an increased
level of passthrough revenue.
As expected, adjusted EBITDA was lower year-on-year, down around
12% to around $150 million, given a lower level of contract
close-out benefits in the year.
Investment Services revenue of around $200 million was broadly
flat compared to last year, with adjusted EBITDA (now including our
Turbines joint ventures in all periods(4) ) slightly higher at
around $70 million.
As expected, central costs were broadly flat year-on-year at
around $75 million.
Other financial information
The sale of the Built Environment Consulting business resulted
in a significant exceptional gain on sale of around $600 million in
the period.
As guided at our Capital Markets Day in November 2022, there is
an impairment risk around goodwill and intangibles on our balance
sheet given the sale of Built Environment Consulting and movement
in discount rates. Our impairment review will conclude for the full
year results.
FURTHER DETAILS
Conference call
A webcast and conference call will be held today at 8:00am (UK
time) with Ken Gilmartin (CEO) and David Kemp (CFO). The webcast
will be live at https://edge.media-server.com/mmc/p/3vcwn9b2 .
To join the conference call, and to ask any questions, please
register via:
https://register.vevent.com/register/BI5c6decc0dabf4babb86e8cdb242af650
T he webcast and transcript will be available after the event on
our website, www.woodplc.com/investors .
Full year results
We will publish our full year results in full on 28 March
2023.
For further information:
Simon McGough, President, Investor
Relations +44 (0)7850 978 741
Kevin Smith, Citigate Dewe Rogerson +44 (0)20 7638 9571
Notes
1. Estimated share of FY22 revenue related to sustainable
solutions, as defined by Wood. Sustainable solutions consist
of activities related to: renewable energy, hydrogen, carbon
capture & storage, electrification and electricity transmission
& distribution, LNG, waste to energy, sustainable fuels
& feedstocks and recycling, processing of energy transition
minerals, life sciences, and decarbonisation in oil & gas,
refining & chemicals, minerals processing and other industrial
processes. In the case of mixed scopes including a decarbonisation
element, these are only included in decarbonisation if 75%
or more of the scope relates to that element, in which case
the total revenue is recorded in decarbonisation.
2. The Group uses a receivables financing facility of $200
million. The amount utilised at 31 December 2022 was $200
million (31 December 2021: $200 million). This facility
is non-recourse to the Group and, as such is not included
in our net debt.
3. Net debt / EBITDA (excluding leases) at 31 December 2022
c.1.3 times. Net debt / EBITDA ratio calculated on the basis
prior to the adoption of IFRS 16, using net debt excluding
leases and EBITDA including IFRS 16 depreciation. This measure
is closely aligned to the measure used in our debt covenants.
4. The results of Turbines joint ventures now included in
Investment Services where they were previously included
within Operations. The adjusted EBITDA from these JVs was
$48 million in FY22 and $54 million in FY21.
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END
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