John Wood Group PLC (LSE:WG.) revealed it is launching cost-cutting action, to cleave some $145 million of overhead in the coming years.
It comes amidst an ongoing turnaround and business transition programme, against a “disappointing financial performance”.
The offshore engineer and services firm, cautioned that its outgoings – or ‘negative free cash flow’ – would be in between $150 million and $200 million in 2025. It intends to offset with asset disposals and cost-cutting, to bring the company back into positive cash flow in the 2026 financial year.
Meanwhile, an independent strategic review is being undertaken by Deloitte.
"This is a difficult announcement amid our transformation. While we have made progress, I am disappointed in our financial performance,” chief executive Ken Gilmartin said in a statement.
“Consequently, we are taking decisive actions to ensure we can meet the opportunities we have in growing markets, principally energy.
Strategic review and refinancing
"While the likely findings from the independent review are expected to have no material impact on the group's cash position and future cash generation, it clearly gives us areas to focus on and we are initiating steps now to further improve our financial culture, governance and controls.
Gilmarten added: "We have announced further actions to address the cost base of the business to right size Wood for the future, and have laid out a very clear route to positive free cash flow in 2026.”
The majority of Wood Group’s debt facilities are due to mature in October 2026 (net debt currently stands at around $690 million), and it undertaking a “holistic review” of potential refinancing options and is talking to its lenders.
2024 trading
In today’s trading update, covering 2024, the company said earnings (adjusted EBITDA) is expected between $450.00 million and $460.00 million.
The company’s order book increased to about $6.20 billion as of 31 December 2024, compared to $5.40 billion at the end of September.