16th Jan 2020 09:05
(Alliance News) - Energy services firm John Wood Group PLC guided for earnings growth in 2019, despite revenue remaining flat, as markets improved.
Shares were 8.2% higher on Thursday morning in London at a price of 400.44 pence each.
Aberdeen-based John Wood sees adjusted earnings before interest, tax, depreciation and amortisation of between USD850 million and USD860 million in 2019, compared to USD694 million a year prior. This suggests a 22% to 24% rise year-on-year.
Operating profit before exceptional items is seen between USD410 million and USD420 million, from USD357 million the year before. This means another year of strong growth, of between 15% and 18%, after 2018's year-on-year rise of 68%.
John Wood has guided for revenue of USD10 billion, an approximate 9% drop year-on-year, but said activity remains robust.
The firm said there was a growth in activity in the Middle East, the Caspian, and the Asia-Pacific.
John Wood has achieved better-than-expected cash generation, it continued, meaning it has reduced net debt as of December 31 to below the USD1.5 billion mark.
"Our 2019 results will demonstrate earnings growth, margin improvement and strong operational cash generation, resulting in a reduction in net debt. In the fourth quarter, we outlined our clear strategy to focus on higher-margin project management, operations and consulting activities and announced the formation of our Technical Consulting Solutions business," said Chief Executive Robin Watson.
"We also continue to make good progress on portfolio rationalisation," he added. John Wood announced the sale of its nuclear business for USD325 million late in 2019.
Looking ahead, the company said it is well-positioned. It sees an uptick in activity in the Asia Pacific and the Middle East, though geopolitical tensions may pose a risk.
Capital discipline is a feature in the Americas, John Wood noted, but it said the outlook for renewables is "robust" and the company has a strong pipeline in the US solar sector.
"Overall, we expect modest revenue growth in 2020 and growth in adjusted Ebitda to reflect a continued focus on our medium-term margin improvement strategy," John Wood concluded.
By George Collard; [email protected]
Copyright 2020 Alliance News Limited. All Rights Reserved.
Related Shares:
Wood Group (J)