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Highlights:
- Independent Review Launched: Deloitte to assess contract reporting, accounting, and governance at Wood Group.
- Quarterly Performance Mixed: Revenue up slightly, but underperformance noted in the projects division.
- Cost-Cutting on Track: Company expects annual savings of $60 million from cost-reduction initiatives.
John Wood Group PLC (LSE:WG) saw a sharp drop in shares following the announcement of an independent review by Deloitte to examine its business practices, specifically around contract reporting, accounting, and governance. The review was prompted by recent write-offs on large-scale projects and seeks to determine if any restatements of prior year results may be necessary. Deloitte’s findings are expected to provide critical insight into the company’s project management and financial reporting, with updates forthcoming as the review progresses.
In its third-quarter financial report, Wood Group indicated mixed results. Quarterly revenue reached $1.48 billion, marking a modest 1% growth compared to the same period last year, though year-to-date revenue of $4.33 billion reflects a 3% decline year-over-year. Notably, the company’s order book has decreased 8% to $5.4 billion since last September, reflecting lower demand or project deferrals. Despite these challenges, Wood Group maintained its full-year forecast, projecting high single-digit adjusted EBITDA growth, underpinned by an expected improvement in the fourth quarter.
Wood Group’s strategic cost-cutting program remains on track, with targeted annual savings of $60 million. Chief Executive Ken Gilmartin highlighted the progress made in simplifying and elevating the company’s quality. However, he acknowledged that performance was uneven across divisions. While the operations and consulting segments posted positive year-over-year growth and margin improvements, the projects business lagged due to delayed awards in the chemicals sector and ongoing challenges in minerals and life sciences.
Gilmartin stated that actions are being taken to address the underperformance in these areas as the company continues its turnaround efforts. Wood Group remains committed to restructuring and reinforcing its position in the market, though the company acknowledges the need for strategic adjustments and operational improvements in specific segments.
