Wood Group announces independent review, shares crater
By Michele Maatouk
Date: Thursday 07 Nov 2024
(Sharecast News) - Wood Group shares were in freefall on Thursday as the oil services firm announced the launch of an independent review of its business that could lead to restatements and said third-quarter trading in its Projects segment was "disappointing".
The company said it was commissioning an independent review by Deloitte "following the exceptional contract write-offs relating to the exit from lump sum turnkey and large-scale EPC reported at the half year 2024 results".
This review will focus on reported positions on contracts in Projects, accounting, governance and controls, including whether any prior year restatement may be required.
Wood Group said an update will be provided as appropriate once the review has been concluded.
News of the review came alongside an update for the quarter ended 30 September, in which Wood said that its Projects business was hit by delayed awards in the chemicals business and continued weakness in minerals and life sciences.
Wood Group said it was continuing "to take actions to redress this underperformance".
Third-quarter group revenue ticked up just 1% from the same period a year earlier to $1.5bn, with strong growth in Operations offsetting lower revenue in Consulting and Projects.
Group revenue for the first nine months of the year was $4.3bn, down around 3% on the same period a year earlier. This was mainly due to lower revenue in the Projects business following the company's shift away from large-scale EPC work and lower pass-through activity.
Group adjusted earnings before interest, tax, depreciation and amortisation for Q3 were lower than last year, it said, with growth in Consulting and Operations more than offset by a decline in the Projects business.
In the year to date, adjusted EBITDA was up 4%, with "very strong" growth in Operations and "modest" growth in Consulting partly offset by the weakness in Projects.
Chief executive Ken Gilmartin said it was "a mixed quarter" for group performance but reiterated full-year guidance of high single digit growth in EBITDA and for net debt to be broadly flat compared to last year.
At 0920 GMT, the shares were down 40.5% at 74.10p.
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