Wood Group is refreshing its strategy including new targets, as its shares plummeted by 13.5% this morning.
The engineering and consultancy London-listed group told investors it would not return to positive free flow next year.
Today at 2pm, the group is holding a capital markets day to outline its plans: ttps://cmd.woodplc.com/
Wood Group said it would now focus on “attractive end markets where we are differentiated”, such oil, gas and chemicals, which are large markets with solid growth; hydrogen and carbon capture, which are small markets with substantial growth potential; and minerals and life sciences, which are large markets where the company aims to grow its share significantly.
Bosses said cashflow would be profitable from 2024 and that they expected adjusted earnings before interest, depreciation and amortisation (EBITDA) to be “flat in the nearer term” as the company reinvests to secure growth.
Ken Gilmartin, CEO, said: “Today is an important moment for Wood as we set out our refreshed strategy. There is huge potential in Wood – we have over 35,000 highly skilled colleagues, long-term client relationships and leading engineering and consulting capabilities.
“We are now taking a more focused approach to growth, targeting specific priority markets across energy and materials that best match our competitive strengths. This tighter focus will help ensure we can grow both profitably and sustainably.
“Our turnaround is progressing well… we have addressed legacy issues and our strong balance sheet will allow us to deal with the defined schedule of resulting cash outflows.
“Our strategy will deliver returns for our shareholders and today we have set out new financial targets, including to grow EBITDA by mid to high single digit CAGR over the medium term, with momentum building over time as our strategy delivers. Most importantly, based on the highly cash generative nature of our underlying businesses, we expect positive free cash flow (after the impact of legacy cash outflows) from 2024 onwards.”