Resilience from strategic broadening across Energy and Built Environment markets and actions to reduce cost, protect margin & cashflow and ensure balance sheet strength
Delivering earnings at upper end of H1 guidance and significant net debt reduction
Six months ended 30 June | Interim 2020 $m | Interim 2019 $m | Movement % |
Revenue | 4,085 | 4,788 | (14.7)% |
Revenue (on a like-for-like basis)1 | 4,012 | 4,535 | (11.5)% |
Adjusted EBITDA2 | 305 | 384 | (20.6)% |
Adjusted EBITDA Margin | 7.5% | 8.0% | (0.5)% |
Adjusted EBITDA (on a like-for-like basis)1 | 299 | 361 | (17.1)% |
Adjusted EBITDA margin (on a like-for-like basis) | 7.5% | 8.0% | (0.5)% |
Operating profit before exceptional items | 101 | 168 | (39.9)% |
Operating profit | 66 | 139 | (52.5)% |
Profit/(loss) for the period | (11) | 13 | N/a |
Basic EPS | (2.2)c | 2.1c | N/a |
Adjusted diluted EPS | 10.1c | 18.2c | (44.5)% |
Interim Dividend | nil | 11.4c | N/a |
Net debt excluding leases 3 | 1,216 | 1,773 | (31.4)% |
Order book4 | 7,045 | 8,427 | (16.4%) |
“In the first half of 2020, we took early and decisive actions in response to the unprecedented impact of Covid-19 on the global economy and oil price volatility. Focusing first on the safety of our people, we took action to reduce cost, protect margins & cashflow and ensure balance sheet strength, while delivering for customers. We are benefitting from our broader market exposure and have seen relative resilience in two thirds of our revenue which is derived from chemicals & downstream, renewables and built environment markets. We have successfully protected margins, and delivered trading performance at the upper end of guidance while reducing net debt as a result of portfolio optimisation and steps taken to protect cashflow. Our objectives are to maintain full year margins in line with 2019 and deliver strong cashflow to further reduce debt in the second half.”
- Robin Watson, Chief Executive
First half highlights
Breadth of end market exposure benefitting revenue resilience
- Fast growing renewables activity and more resilient downstream & chemicals and built environment markets account for c65% of revenues
- Revenue of $4.1bn down 14.7% (11.5% on a like for like basis)
Successfully protecting margin: early and decisive actions to reduce cost
- Benefitting from active management of operational utilisation
- Actions to deliver >$200m overhead savings complete; $70m impact in H1
- Improved margins in ASEAAA and TCS compared to H1 19, offset by reduced margins in ASA
- Adjusted EBITDA of $305m at upper end of guidance and operating profit before exceptionals of $101m ahead of guidance
Delivering reduction in net debt
- Net debt excluding leases reduced significantly to $1.22bn at 30 June 2020 (30 June 2019: $1.77bn and 31 December 2019: $1.42bn), benefitting from disposal proceeds and steps taken to protect cashflow
- Net debt excluding leases : adjusted EBITDA (excluding IFRS 16) 1.96x3 (30 June 2019: 2.5x and 31 December 2019: 2.0x). Covenants at 3.5x
- No interim dividend while uncertainty arising from Covid-19 and oil price volatility persists
- Considerable levels of financial headroom: undrawn facilities $1.627bn
Differentiated sustainability leadership
- Over 40,000 staff successfully working remotely and others continuing to work onsite safely supporting vital services
- Commitment to reduce scope 1 and 2 greenhouse gas emissions by 40% by 2030
- Third party recognition of environmental, social and corporate sustainability leadership
FY 2020 outlook
Winning work, focused on margin protection and cash generation to reduce debt
- Relative resilience in chemicals & downstream, renewables and built environment, continuing to help mitigate challenges in upstream/midstream
- Successful diversification evident in breadth of new orders of $3.3bn secured in H1
- Order book at 30 June $7.0bn (down 16.4% on June 2019 on a like for like basis)
- $3.1bn of order book due to be delivered in H2 2020, giving higher than typical visibility: c90% of forecast revenue delivered or secured at this point in 2019
- Recent signs of stabilisation but risks of downward scope variations, deferrals and cancellation of secured work persist: prepared for a wide range of outcomes
- Focused on controlling what we can control to deliver full year EBITDA margins at the 2019 level of 8.6%
- Confident of delivering stronger second half margin: managing operational utilisation and impact of >$200m of overhead cost reductions from actions completed in H1
- Expect good cash generation and a further reduction in net debt in the second half
- Well placed for medium term growth as markets recover and the energy transition gathers pace
Notes:
- Revenue on a like-for-like basis is calculated as revenue less revenue from disposals executed in the first half of 2020 and adjusted EBITDA on a like-for-like basis is calculated as adjusted EBITDA less the adjusted EBITDA from those disposals. In H1 2020 executed disposals consisted of our nuclear and industrial services businesses. Comparative figures also exclude revenue and adjusted EBITDA from the disposal of TNT, completed in H1 2019. These amounts are presented as a measure of underlying business performance excluding businesses disposed. These disposals accounted for $73m of revenue in H1 2020 (H1 2019: $253m) and Adjusted EBITDA of $6m (H1 2019: $23m).
- A reconciliation of adjusted EBITDA to operating profit (pre-exceptional items) is shown in note 2 to the interim financial statements.
- Net debt excluding leases is total group borrowings, offset by cash and cash equivalents. Borrowings comprise loans drawn on the Group’s revolving credit facility, term loans, overdrafts and unsecured senior loan notes issued in the US private placement market. Borrowings do not include obligations relating to leases. Cash and cash equivalents include cash at bank and in hand and short term bank deposits. Borrowings, cash and cash equivalents contained within assets classified as held for sale are also included in net debt. The net debt: adjusted EBITDA ratio is calculated on the existing basis prior to the adoption of IFRS 16 in 2019 and is based on net debt excluding leases. These measures are presented as they closely aligned to the measure used in our financing covenants.
- Order book comprises revenue that is supported by a signed contract or written purchase order for work secured under a single contract award or frame agreements. Work under multi-year agreements is recognised in order book according to anticipated activity supported by purchase orders, customer plans or management estimates. Where contracts have optional extension periods, only the confirmed term is included. Order book disclosure is aligned with the IFRS definition of revenue and does not include Wood’s proportional share of joint venture order book. For comparability, order book at 30 June 2019 excludes the order book of the nuclear and industrial services businesses disposed. Order book is presented as an indicator of the visibility of future revenue.
Wood
Andrew Rose – Head of Investor Relations 01224 532 716
Ellie Dixon – Investor Relations Senior Manager 01224 851 369
Citigate Dewe Rogerson
Kevin Smith 020 7638 9571
Chris Barrie
There will be an analyst and investor presentation webcast today at 9:00am, immediately followed by a live Q&A conference call. Replay facilities will be available later in the day. The webcast can be accessed using the following link: https://edge.media-server.com/mmc/p/vv6p3bou
If you wish to ask a question during the Q&A session, or are unable to listen to the presentation via the webcast, please dial in to the audio conference call using the details below. Please note that questions may be submitted via the conference call only and it is recommended that you dial in at the start of the webcast.
UK / international: +44 2071 928 338
US: +1 646 741 3167
Conference passcode: 1799153
Download in full: Half Year Report 2020 (PDF, 843Kb)
Download the presentation: Half Year Presentation 2020 (PDF,1.5Mb)