Wednesday 26 June 2019 8:30 am

Wood Group boosts first-half profit as it looks to cut debt pile

Energy services firm Wood Group has reported profit growth in the first half of the year, thanks to an improvement in its margins.

The FTSE 250 firm said revenue for the six months to the end of June was in line with the previous year.

Read more: Wood Group wins $1bn nuclear contract at Sellafield decommissioning site

“We have delivered significant growth in operating profit together with earnings margin improvement,” said chief executive Robin Watson.

“This has been led by our activities in energy markets in the eastern hemisphere and our environment and infrastructure operations in North America, together with the delivery of further cost synergies.”

Shares in Wood Group rose almost five per cent following the announcement.

Wood Group said its outlook for the full year was unchanged, despite the impact of disposals in the first half, which contributed $20m (£15.8m) in earnings before interest, tax, depreciation and amortisation.

The firm said earnings growth will be fuelled by a rise in revenue of roughly five per cent, coupled with cost savings of roughly $60m.

“Today’s update underlines the fact that the company remains in an encouraging position: performance is ahead of the same period last year, cash generation is strong, and debt – the main source of concern about Wood – is being cut in line with expectations,” said David Barclay, senior investment manager at Brewin Dolphin.

Wood Group has embarked on a plan to sell off non-core assets as part of a deleveraging programme, but has warned the process will be slower than expected.

Read more: Wood Group shares tumble after $38m sale of non-core business

“While some analysts may want to accelerate the pace of debt reduction, this is a steady update against a volatile backdrop for the company,” Barclay added.

Wood Group said it expects a modest reduction in net debt for the full year, excluding the impact of disposals.