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Wood Group confident as it returns to growth with operating profit increased 68 percent

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Wood Group
Wood Group   Operating profit before exceptional items increased rose 68% to $357m

Wood Group reported a return to growth ahead of its 2018 consensus in its full-year results on Tuesday, with revenue including joint ventures up 11.7% on a proforma basis to $11.04bn, and adjusted EBITA up 5.4% compared to 2017's proforma figure to $630m.

Wood Group said that reflected "good" trading momentum and cost synergy delivery of $55m in the year ended 31 December.

Operating profit before exceptional items increased rose 68% to $357m, after non-cash amortisation charges of $249m, with the company's loss for the period narrowing to $7.6m from $30.0m year-on-year, after exceptional costs of $183m related to synergy delivery, restructuring, impairment of EthosEnergy and guaranteed minimum pensions.

The board reported a "strong" balance sheet, with net debt reducing to $1.5bn from $1.6bn, in line with the guidance provided in its December trading update. Total facilities headroom of $1.3bn.

Its net debt-to-adjusted EBITDA ratio reduced to 2.2x from 2.4x year-on-year.

Cash conversion, calculated as cash generated from operations after exceptional items as a percentage of adjusted EBITDA, excluding joint ventures, improved "significantly" to 102% from a proforma 2017 of 14%, including the $154m that had been drawn down from Wood's receivables facility.

The board also reported "good progress" on its non-core asset disposal programme, having entered agreements to dispose of assets for consideration of more than $50m to date.

Adjusted diluted earnings per share totalled 57.4 cents, which was up 8% and ahead of the company's 2018 consensus, while basic losses per share narrowed to 1.3 cents from 7.4 cents year-on-year.

Wood Group proposed a final dividend of 23.7c, which would be an increase 2% and in line with the company's progressive dividend policy.

On the operational front, Wood Group reported higher activity levels across all of its business units, with growth in its Asset Solutions Americas (ASA) operation coming from power, downstream and chemicals, and US shale.

It said its Asset Solutions Europe, Africa, Asia, Australia (ASEWood Group) unit grew in operations solutions work in Asia Pacific and the Middle East, while its Specialist Technical Solutions (STS) operation delivered increased activity in minerals processing, automation and control, and nuclear.

Finally, its Environment and Infrastructure Services (E&IS) operation saw increased consultancy work with long standing customers in North America.


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