Wood Group (John) PLC showcased a commendable performance in FY 2023, demonstrating robust revenue and adjusted EBITDA growth, signalling the successful execution of its three-year growth strategy. The company reported a revenue increase of 8.7% at constant currency, totalling $5.9 billion. Adjusted EBITDA rose by 10.9% to $423 million, reflecting effective cost management and strategic focus on high-margin Consulting and sustainable solutions. Adjusted diluted EPS improved significantly to 2.3c from a loss of 3.1c in the previous year, highlighting operational efficiencies and stronger financial discipline.

Financial Performance

Wood Group’s financial health in FY 2023 is marked by a series of strategic achievements, including revenue growth across all business units and substantial improvements in operating cash flow, which turned positive to $194 million. The net debt excluding leases saw a notable increase to $694 million, indicating strategic investments and operational expenditures aimed at fuelling future growth. The order book value increased to $6.3 billion, supported by significant contracts and a focus on sustainable solutions, which now represent 22% of Group revenue.

CEO Ken Gilmartin highlighted the company’s strong performance aligned with the growth strategy, noting significant progress in Consulting and sustainable solutions. Management remains focused on driving efficiency through a simplification programme, expected to yield substantial savings from 2025 onwards. The strategic shift towards high-margin business areas and sustainable solutions is set to further solidify Wood Group’s market position.

Risk Factors

Key risk factors for Wood Group include market volatility, geopolitical tensions, and the transition to green energy, which may impact demand for oil and gas services. The company’s increased net debt position also presents a financial risk, although this is mitigated by a robust order book and strategic divestitures planned for 2024. The ongoing simplification programme, while aimed at enhancing operational efficiency, incurs short-term costs and execution risks.

Outlook

Wood Group’s outlook for 2024 and beyond is positive, with expectations of reaching the upper end of medium-term targets. The simplification programme is anticipated to enhance EBITDA growth in 2025, with a sustained focus on margin expansion and cash generation. Sustainable solutions and Consulting are expected to be key growth drivers, supported by favourable market dynamics and strategic initiatives.

Investors should note Wood Group’s successful strategy execution, marked by revenue and EBITDA growth, and a strong order book focusing on sustainable solutions. The ongoing simplification programme, aimed at cost efficiency and margin expansion, alongside strategic divestitures, presents a favourable investment outlook. The company’s resilience in managing risks and leveraging market opportunities further underscores its investment appeal.