By Ian McConnell

ABERDEEN oil services company Wood has flagged an expected 19 per cent fall in underlying first-half earnings, while highlighting the benefits of its diversification drive.

Chief executive Robin Watson underlined “unique and unparalleled” challenges presented by the Covid-19 coronavirus crisis and oil-price volatility but flagged continuing contract wins and execution of work amid the disruption.

Wood noted its recent success in winning contracts from pharmaceuticals group GlaxoSmithKline and the US Navy. It also flagged onshore wind and solar contract wins.

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It said, on a like-for-like basis adjusting for the disposals of its nuclear and industrial services businesses in the opening quarter of 2020, revenues in the six months to June would be down around 11% on the same period of last year. It said this demonstrated resilience of demand for its services “across a diverse market footprint”.

Wood noted, reflecting “macro challenges”, the fall in first-half revenues “was heavily weighted to the second quarter”. It said revenue in the second quarter was expected to be $2 billion. Wood noted first-half revenue included “increased renewables activity and relatively robust activity in [the] chemicals and downstream and built environment markets”.

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It added that adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) would, on a like-for-like basis, be down around 19%,, citing the benefit of actions to protect margins.

Wood said that, on a reported basis, revenue would be around $4.1bn, adjusted EBITDA would be around $295 million to $305m, and operating profit before exceptionals would be around $80m to $90m.

Mr Watson said: “The relative strength we are seeing in chemicals and downstream, the built environment and renewables, where we will double our revenues in 2020, is helping to mitigate the impact of challenging conditions in upstream and midstream oil and gas.”

Wood said its order book at the end of May was $7.0bn – down around 11% since December 2019 – of which around $3.5bn is due to be delivered in 2020.

Mr Watson said: “The global engineering and consultancy market is facing unique and unparalleled challenges in 2020 from Covid-19 and volatility in oil prices. The safety of our people, clients and suppliers remains our top priority through this period. Despite the disruption, we are continuing to successfully win and execute work, supported by our strategy of broadening the business across the global energy market and the built environment."

Shares in Wood dipped by 2.6p or 1.1% to 224.3p in the wake of the trading statement.