Wood Group’s Share Price Plunged 6.11% on Its FY 2023 Results

The John Wood Group PLC (LON: WG) share price plunged 6.11% after releasing its financial results for the year ended 31 December 2023. In its first year of implementing a new strategic vision, the company has successfully met its performance targets, experiencing revenue expansion across all divisions and witnessing robust growth in adjusted EBITDA. 

The company has seen its most rapid expansion in the Consulting segment and within its sustainable solutions offerings. The order book has swelled by 4% to $6.3 billion, with a like-for-like increase of 7%. The sales pipeline for factored orders has also seen double-digit growth. 

Notably, there has been a positive shift in pricing trends across the sales pipeline, order book, and margin outcomes in 2023, leading to an adjusted operating cash flow surge to $194 million—an uplift of $260 million from the preceding year.

A particular highlight has been the growth of the sustainable solutions business, now valued at $1.3 billion. This represents a 15% increase in revenue and accounts for 22% of the Group's revenue. This segment represents 43% of the factored sales pipeline, underlining the company's commitment to sustainability.

Efforts to refine strategic delivery have been underscored by focusing on margin enhancement through continued growth, shifting towards higher-growth areas like Consulting, and improved pricing coupled with cost reduction measures. 

A simplification program is set to yield efficiency gains, targeting annual savings of around $60 million from 2025, with an anticipated benefit of about $10 million within FY24. This initiative is expected to bolster EBITDA and EBIT margins and enhance future cash generation, with a one-time cash cost of approximately $70 million over the next year.

The portfolio realignment with strategic goals includes progressing with the sale of EthosEnergy and other minor divestitures.

Looking forward to 2024, the company anticipates adjusted EBITDA growth to reach the upper end of its mid to high single-digit target range, excluding disposals. This optimism is fueled by revenue growth, an evolving business mix, enhanced pricing, and the immediate financial benefits of the simplification program despite the expected seasonal performance variation.

Positive operating cash trends and a continued cash performance improvement are projected. Net debt is forecasted to decrease from the December 2023 level by December 2024, buoyed by proceeds from planned disposals.

Wood Group share price. 

The John Wood Group share price plunged 6.11% to trade at 138.63p from Monday’s closing price of 147.65p.