John Wood Group PLC (‘Wood’ or ‘the Group’) announces a trading update for the half year ended 30 June 2024 (‘HY24’).
HY24 highlights
Adjusted EBITDA of c.$210 million was up around 4% with margin expansion more than offsetting expected lower revenue
Adjusted EBITDA margin of c.7.4% compared to 6.8% last year helped by improved pricing, lower pass-through activity and a very strong performance in Operations
Revenue of c.$2.8 billion was down around 6% with good growth in Operations offset by expected lower revenue in Projects given our strategic shift away from EPC work, lower pass-through activity and ongoing weakness in our minerals business
Order book of c.$6.1 billion was up 2% compared to June 2023, with sustainable solutions over 40% of our pipeline
Simplification programme moving at pace with around $25 million of annualised savings already secured of the total annualised savings target of around $60 million from 2025
Ken Gilmartin, CEO, said:
“Our growth strategy continues to deliver, with further growth in EBITDA and order book. Crucially, we are now seeing the improving quality of our business coming through with margin expansion as we focus on engineering services and consulting and move away from EPC work.
“As we look ahead, we remain focused on delivering our potential, including generating significant free cash flow next year. We are winning exciting and complex work across our businesses whilst progressing both our Simplification and disposal programmes. We are pleased to reconfirm our outlooks for both this year and 2025”.
Reconfirmed full year outlook
We continue to expect high single digit growth in adjusted EBITDA, before the impact of disposals. Performance will be weighted to the second half, reflecting the typical seasonality of our business and the phasing of the in-year benefit of the Simplification programme.
Our operating cash flow performance is expected to continue to improve, partly through improved cash management across our business, especially given the second half weighted revenue profile of the Group this year. Exceptional cash flows will be in line with our previous guidance, and weighted to the first half.
Net debt at 31 December 2024 is expected to be at a similar level to 31 December 2023 after the proceeds from planned disposals, which are due to complete in the second half of this year.
2025 outlook reiterated
We continue to expect EBITDA growth in 2025 to exceed our medium-term target, with the annualised benefits from our Simplification programme of around $60 million on top of growth consistent with our strategy. With this improving profitability and continued improvements in cash conversion, we expect to deliver significant free cash flow in 2025.
Half year results
We will publish our half year results in full on 20 August 2024.
Note
As announced on 3 July 2024, Dar Al-Handasah Consultants Shair and Partners Holdings Ltd ("Sidara") is required either to announce a firm intention to make an offer for Wood or to announce that it does not intend to make an offer by no later than 31 July 2024. Further announcements will be made as appropriate.
