Wood, the global consulting and engineering company, announces its results for the year ended 31 December 2020:
Our resilient financial performance in 2020 was underpinned by our strategic positioning across broad end markets and flexible business model. We saw growth in renewables activity, strength in the built environment and relatively robust revenue in process & chemicals and we continued to win work, against the challenging backdrop of Covid-19 and oil price volatility. Our decisive actions, focused on the health & safety of our people, delivering for our clients, reducing cost, protecting the balance sheet and generating strong cashflow, underpinned delivery of strong margins and a significant reduction in net debt. Looking ahead, we are pleased to be nearing resolution of the legacy investigations so that we will be able to draw a line under them and while near-term headwinds remain in 2021, we saw improving momentum in awards in late Q4 and are encouraged by the medium-term outlook for our markets. To ensure our business is fit for the accelerating pace of energy transition and the drive towards more sustainable infrastructure, we are today announcing programmes to unlock stronger medium-term growth, deliver efficiency and create value.- Robin Watson, Chief Executive
Highlights
Strategic broadening benefitting revenue resilience
Resilient performance in unprecedented trading conditions underpinned by breadth of exposure across Energy and Built Environment markets
Revenue of $7.6bn down 23.5% (Revenue on a like for like basis of $7.5bn, down 20.2%)
Significant reduction in conventional energy activity mitigated by strength in built environment, growth in renewables and relatively robust revenues in process & chemicals
Successfully protected margin through early action on cost
Strong EBITDA margin delivery; adjusted EBITDA margin 8.3% (2019: 8.6%) reflecting strong operational delivery in ASEAAA and TCS offset by substantially lower margins in ASA
Leveraged flexible model to take early and decisive action to protect margin; improved operational utilisation and delivered c$230m overhead savings with an exceptional cost to achieve of c$100m
Adjusted EBITDA of $630m and operating profit before exceptionals of $214m in line with January trading update
Delivering a significant reduction in net debt
Net debt excluding leases reduced by $410m to $1.01bn at 31 December 2020 (31 December 2019: $1.42bn and 30 June 2020: $1.22bn), benefitting from disposal proceeds from portfolio optimization, steps taken to protect cashflow and improved working capital performance
Net debt excluding leases : adjusted EBITDA (excluding IFRS 16) of 2.1x4 (31 December 2019: 2.0x and 30 June 2020: 2.0x). Covenants at 3.5x
Considerable financial headroom: undrawn facilities of $1.74bn and revolving credit facility extended to May 2023
Prioritizing balance sheet strength; no dividends proposed in respect of FY 2020
Differentiated ESG and sustainability approach to maintain sector leading position
Committed to maintaining our position as leaders in our field on ESG matters
New targets announced for the delivery of our purpose, sustainability, inclusion & diversity, fair working practices and community and environmental impact
Committed to reduce scope 1 and 2 emissions by 40% by 2030, on our journey to net zero
Strong third-party recognition: awarded AA Leader rating from MSCI for sixth consecutive year
Delivering innovative solutions for energy transition and sustainable infrastructure: recently awarded evaluation scopes for the decarbonization of industrial clusters and the supply of domestic hydrogen
Leadership incentivisation aligned to delivery of future ESG & sustainability targets
Accelerating our medium-term strategy: the Future Fit programme
18 month programme of initiatives to unlock stronger medium-term growth, deliver efficiency and create value
Optimizing our operating model - simplifying to three global business units; Consulting, Projects and Operations
Efficiency savings of c$40m in 2021, with costs to deliver of c$30m
Organising our business to deliver solutions for a net zero future and a more sustainable, resilient and livable world
New Chief Operating Officer role, established to drive consistent global predictable execution outcomes, commercial innovation and digital delivery
Approaching resolution on legacy investigations
Discussions concerning the resolution of investigations by the SFO and authorities in the US, Brazil & Scotland are at an advanced stage
Anticipation that all matters will be settled at an aggregate cost of $197m, including $46m provided in 2019. Additional provision of $151m booked in 2020. Cash settlement expected over the period of 2021-2024
Outlook
Order book reflects macro conditions & tendering approach with improving award momentum in late Q4
Order book at 31 December $6.5bn; 67% to be delivered in 2021, typical at this point in the year
Order book down c17% on 2019 reflecting macro conditions and discerning bidder approach
Progression in order book reflects expectations of strength in built environment, robustness in renewables and lower project awards in conventional energy and process & chemicals
Improving momentum in new awards in late Q4 2020; December order book up c5% on November
Short cycle order book combined with opportunity pipeline at pre-Covid 19 levels, supporting expectation of swift acceleration in awards as markets recover
Order book evolution; evolving towards lower risk, higher margin consultancy
Strategic positioning, differentiation and strong customer relationships key to winning work
Increasing proportion of order book from consultancy work, particularly in built environment
2021 financial focus: EBITDA margin improvement & cashflow
Expectation of lower activity and a continued focus on improving margin
Margin improvement will be driven by maintaining high utilisation, improved project execution and operational and efficiency improvements, including $40m from Future Fit, to offset lower activity. Reversal of temporary savings will be offset by the FY impact of 2020 savings. Business mix more orientated towards consultancy will also benefit margin
Cash generation to benefit from unwind of customer advances not repeating, partly offset by some investigation settlements and increased capex related to investment in digitalization
