Scottish energy services giant Wood has posted a full-year loss following its £2.2 billion acquisition of Amec Foster Wheeler (AFW) and said it expects earnings growth in 2018 to be “modest.”
Shares in the north-east headquartered group moved almost 5% lower in morning trading yesterday as investors reacted to the group’s financial outcome for the year to December 31.
Total revenue for the period grew by 25% to $6.16 billion, while earnings before interest, taxation and amortisation (EBITA) were 2.5% up at $371.6m.
However, pre-tax profits before exceptional and discontinued items fell from $233.3m in 2016 to $177.4m and the bottom line moved into the red for the year with a loss of $30m as compared to a profit of $34.4m in 2016.
The exceptional items that dragged the company to a loss included $67m in respect of the acquisition of AFW and a further $51m of costs racked up in integrating the two businesses.
Despite the loss, Wood declared a proposed final dividend of 23.2 cents, taking the total dividend for the full year to 34.3 cents, a 3% rise on 2016’s payout.
Chief executive Robin Watson said 2017 had been a year of “transformational strategic development” for Wood as it acquired and integrated AFW.
“We are a broader business with multi-sector, full service capability across energy and industrial markets and a stronger, more balanced offering in oil and gas,” Mr Watson said.
“Integration is progressing ahead of schedule with initial cost synergies achieved earlier than plan.
“Financial performance for 2017 is in line with guidance.
“I am confident we have a unique platform to unlock revenue synergies and generate good longer-term growth.”
The company said it expected “modest” EBITA growth in 2018 as global oil and gas markets continued to recover.
Chairman Ian Marchant said the group’s asset-light business model had been crucial to its continuing health during the downturn, and the business was well positioned for growth.
He said: “Looking ahead, the board is very confident that Wood will build on the integrated growth platform of Wood Group and Amec Foster Wheeler for the long-term benefit of all stakeholders.”
Shares in Wood closed down 6.80% at 597.60p.