John Wood shares fall by half after big write-offs are reviewed

Shares in John Wood Group collapsed by more than half after the energy services group disclosed an independent review into a series of multimillion-dollar writedowns.
The London-listed offshore engineer announced that Deloitte is scrutinising the transactions “in response to dialogue” with its auditor KPMG, another Big Four accountant.
At its interim results in August, Aberdeen-based Wood took a $140 million writedown relating to its decision to exit from large-scale engineering, procurement and construction projects as part of a major turnaround plan.
The review will look into governance issues surrounding the decision and determine whether any previously reported results will need to be restated. Positions on contracts in the projects division as well as accounting and controls are also to be examined.
Ken Gilmartin, the group’s chief executive, said an update on the process would be provided “following its conclusion” but did not give any timeline as to when that might be.
Earlier this year, Wood was subject to takeover interest from Sidara, a Dubai engineering consultancy, which valued the business at £1.6 billion. The suitor eventually walked away following a period of due diligence.
It was the second year in a row that Wood attracted interest after Apollo, the US private equity firm, also stopped short of making a bid which put a £2.2 billion price tag on the business.
The sharp fall in shares — which fell 74¾p, or 60 per cent, to close at 49¾p — left the company with a market value of £343 million.
The announcement came alongside third-quarter results which showed the value of Wood’s order book had dropped from $6.1 billion in June to $5.4 billion at the end of September. That was attributed to the phasing of some deals as well as weaknesses in the projects arm, particularly in minerals, chemicals and life sciences.
Gilmartin expected the order book to improve across the fourth quarter and said: “We continue to win fantastic, highly complex engineering and delivery work across our businesses.”
Revenue in the third quarter was 1 per cent up year-on-year at just short of $1.49 billion. Across the first nine months of 2024, Wood said revenue was down 3 per cent at $4.3 billion, which reflected the weaker performance in the projects division.
Adjusted earnings before interest, tax, deprecation and amortisation were up 4 per cent year-on-year across the January to September period.
Gilmartin said the outlook for this year was unchanged with high single-digit growth in underlying profit while net debt would be flat after the impact of disposals.
Analysts from Morgan Stanley and Jefferies noted the company had previously guided towards generating significant free cash flow in 2025 but that outlook was tempered in its trading update.
Gilmartin said the company was “mindful” of the performance in projects but he was still “confident in the continued improvement in the cash trajectory of the group”. Further guidance on cash generation is expected alongside Wood’s annual results.
Wood employs more than 36,000 people around the world working on engineering and operations across sectors such as energy, minerals, net zero and chemicals.