Ken Gilmartin, the chief executive of energy services giant Wood Group, was clearly fired up during interviews this morning to drive home the point that the Scottish company is “delivering on our commitments at every turn”.
The figures from Wood’s half-year trading update gave him a solid platform to work from, with a “good” performance across all business units and a projected 15% increase in group revenues. Amid the distraction earlier this year of repeated and unsolicited bid approaches from US private equity group Apollo, the Aberdeen-headquartered company remained on course to meet financial expectations for the full year in 2023.
READ MORE: Sorry tale as yet another company, Wood, faces takeover
The company’s share price this afternoon, up just marginally, provides little guidance on whether investors are much persuaded by Mr Gilmartin’s assertions that Wood is “winning” both in terms of securing new business and in hitting other milestones in its three-year growth strategy. Hovering around 139p, the stock is currently worth about 58% less than the 240p per share that was pitched by Apollo but which never materialised.
Strong revenue growth, a robust project pipeline, and an expected return to positive free cashflow in the second half of the year illustrate why Apollo was considering a bid of 240p per share when the stock is trading at nearly half that. But in the absence of any other potential suitors since Apollo withdrew in May, Wood shareholders will want to understand what the plan is now to boost returns.
Mr Gilmartin, who just passed his first anniversary as chief executive, is doubling down on the growth plan that he unveiled in November as Wood seeks to shake off legacy issues that have hampered the business in recent years.
READ MORE: Relief for Scotland as loss of Wood Group is avoided
“The piece for us is to continue to deliver to that strategy,” he told The Herald. “The more we grow, the more we continue to win, the more data points that are positive, the more confidence we get and the more investor confidence that we gain, that gets reflected in our share price and ultimately that’s where the returns come back.
“We are on that journey to trade positively, be consistent in what we are doing, and with that is going to come the return to our shareholders.”
It’s quite rational to argue that a three-year strategy deserves more than seven months to prove its worth, but the forbearance of investors who pressured Wood into opening its books to Apollo earlier this year will be tested if another suitor comes calling.
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