- John Wood Group shares have lost 71% of their value over the past 12 months
- The firm now forecasts free cash flow of between -$150m and -$200m in 2025
John Wood Group shares nosedived on Friday as the oilfield services firm warned of negative free cash flow and acknowledged a tough quarterly performance.
Shares in the Aberdeen-based company slumped by more than a third to 43.2p by late Friday morning, taking their losses over the past year to 71 per cent.
Wood now forecasts free cash flow of between -$150million and -$200million in 2025 instead of positive FCF as previously predicted.
The FTSE 250 business attributed this to ‘weaker trading,’ with underlying earnings before nasties anticipated to be lower than last year’s figure of about $450million to $460million.
Wood noted its 2024 earnings were ‘broadly in line with guidance,’ supported by rising activity across Europe and the Middle East in its operations segment, which won big contracts from oil giants like BP, Shell and Equinor.
It also said results were boosted by steps taken in the fourth quarter, including the axing of the annual executive and staff bonuses following poorer-than-expected trade.
John Wood Group shares dived on Friday as the oilfield services provider warned of negative free cash flow and acknowledged a weak quarterly performance
The group further said the updated FCF outlook reflects estimated legacy claims liabilities of around $150million and impacts from Deloitte’s investigation.
Wood appointed Deloitte last November to conduct an independent review of its operations following major write-offs to large-scale projects earlier during the year.
While the firm does not believe the probe will have a ‘material impact’ on its cash position, it is assessing the degree of ‘prior year adjustments’ and their effect on its projects division’s earnings before nasties.
Ken Gilmartin, chief executive of Wood Group, said: ‘This is a difficult announcement amid our transformation. While we have made progress, I am disappointed in our financial performance.
‘Consequently, we are taking decisive actions to ensure we can meet the opportunities we have in growing markets, principally energy.’
The business told investors it was undertaking steps to ‘strengthen significantly’ its financial culture, governance and controls.
Between 2023 and 2026, it hopes to reduce its cost base by around $145million, partly through scrapping jobs in central functions.
Wood is also targeting an additional $150million to $200million of disposals this year, having recently sold its stake in turbine manufacturer EthosEnergy to One Equity Partners for $138million.
The company has itself been the object of takeover attempts by private equity giant Apollo Global Management and Dubai-based engineering firm Sidara in the past two years.
Following multiple offers, both Apollo and Sidara walked away, with the latter blaming ‘rising geopolitical risks and financial market uncertainty.’
In doing so, Wood avoided the fate of many prominent London-listed businesses that have fallen into foreign hands, including cybersecurity group Darktrace, supermarket chain Morrisons, and Robinsons Squash owner Britvic.
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