10th Mar 2020 09:23
(Alliance News) - John Wood Group PLC on Tuesday said that it is "too early" to quantify the effects of coronavirus outbreak and the fall in oil prices on trading performance, as it posted a sharp rise in annual profit on robust activity across energy and built-environment markets.
The oil & gas services company recorded pretax profit of USD148.7 million for 2019, more than doubled from USD53.5 million a year ago, mainly due to lower exceptional charges, which fell to USD107.6 million from USD191.3 million. Revenue dipped 1.2% to USD9.89 billion from USD10.01 billion.
Annual adjusted earnings before interest, tax, depreciation and amortisation - the company's preferred profit measure - totalled USD855 million, up 23% from USD694 million.
"In 2019 we delivered earnings growth, margin improvement and strong cash generation which resulted in a reduction in net debt. The disposal of our nuclear and industrial services businesses generated proceeds of USD430 million in Q1 2020 and accelerated progress to target leverage. We are confident that from this foundation we are building a differentiated, premium, higher margin business, supported by a continued focus on margin improvement, execution excellence and portfolio optimisation," said Chief Executive Robin Watson.
John Wood completed the sale of its nuclear business to US's Jacobs Engineering Group Inc for USD305.0 million on Monday. Additionally, the sale of its industrial unit for USD118 million to Germany's Kaefer was announced in February.
John Wood's order book stood at USD7.89 billion at the end of 2019, down 7.3% from USD8.52 billion.
The company said the current order book reflects its "short cycle model, the work off of legacy fixed price work as the portfolio is de-risked and enhanced tender governance".
Looking to 2020, John Wood said existing forecasts and order book support modest underlying revenue growth and growth in underlying Ebitda, underpinned by margin improvements.
The Aberdeen, Scotland-based company added that recent impacts of the Covid-19 virus outbreak, the substantial fall in oil prices, and actions taken to mitigate the effects of these are not reflected in existing forecasts as it is "too early to quantify".
Oil prices dived 20% on Monday after Saudi Arabia launched an all-out oil war Sunday with the biggest cut in its prices in the last 20 years. This was after a failure by cartel OPEC and its allies to clinch a deal to cut production.
John Wood proposed a final dividend of 23.9 US cents per share, lifting its total payout for 2019 by 0.9% to 35.3 cents from 35.0 cents.
Shares in John Wood were trading flat at 271.90 pence each on Tuesday morning in London, recovering from an initial fall.
By Tapan Panchal; [email protected]
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