Half year results for the six months ended 30 June 2021

First half earnings in line with guidance, reflecting improving momentum in Q2. Strong margin improvement as delivery of efficiencies and improved project execution more than offset lower activity.

Good growth in order book, up c18% year-to-date, underpinning confidence of a return to growth and the delivery of a stronger H2.

Wood, the global consulting and engineering company, announces its results for the six months ended 30 June 2021:

“The first half of 2021 reflects improving momentum in activity in Q2 and a strong margin improvement, with increased margins in all business units and a greater weighting of high margin Consulting activity. Trading momentum and good growth in our order book, which is up c18% year-to-date, underpin our confidence in delivering a stronger second half which will reflect a return to growth compared to both H1 2021 and H2 2020, and further growth in our full year adjusted EBITDA margin.”

- Robin Watson, Chief Executive

First half highlights

Revenue reflects improving momentum in activity in Q2 & benefit of broad end market exposure

• Good activity levels in built environment, relatively robust renewables activity and improving demand in conventional energy markets, partly offsetting lower activity in process & chemicals, as larger projects reached completion
• Revenue of $3.2bn down 22.9%; primarily reflecting the impact of Covid-19 and including a $74m reduction in revenue from disposed businesses
• Improving momentum in activity in Q2; growth in Consulting and Operations compared to Q2 2020
• Order book at June of $7.7bn, up c18% compared to December 2020:
  • Strong order intake in H1 with orders of $3.2bn
  • Continued momentum in Consulting across built environment and energy
  • Excellent growth in Operations, including recent awards of multi-year contract renewals
  • Encouraging signs of markets recovering in Projects, c12% order book growth month on month in June

Strong margin improvement: increased margins in all business units and positive evolution of business mix

• Adjusted EBITDA margin up 80 bps on H1 2020; driven by increased margins in all Business Units including significantly improved margins in Projects, up 220 bps
• Maintenance of high utilisation levels, successful delivery of efficiencies including Future Fit, improving project execution and greater weighting of high margin Consultancy revenue more than offsetting lower activity
• Adjusted EBITDA of $262m and operating profit before exceptionals of $86m in line with guidance

Net debt increase reflects timing of working capital movements

• Net debt excluding leases of $1.28bn at 30 June 2021 (30 June 2020: $1.22bn and 31 December 2020: $1.01bn). Increase driven by a working capital outflow of $237m including unwind of advance payments as major projects completed
• c$100m higher than anticipated due to increased net working capital outflows largely related to timing of receipts expected in H1 but actually received in H2
• Net debt excluding leases : adjusted EBITDA (excluding IFRS 16) 2.9x³ (30 June 2020: 2.0x and 31 December 2020: 2.1x).

FY 2021 outlook: Improving activity levels and strong order book growth underpin our confidence in growth in H2 2021

• Full year revenue in the range of $6.6bn to $6.8bn underpinned by trading momentum and strong order book growth, with $3.0bn for delivery in H2 2021
• Further improvement in full year EBITDA margin to 8.7% to 8.9%, reflecting progress towards our medium-term target of 9.6%
• Confidence in a stronger H2, returning to growth relative to both H1 2021 and H2 2020, whilst also laying strong foundations for 2022
• Full year outlook unchanged. Increased activity in Consulting and growth in Operations expected to partly offset lower activity in Projects
• Expect net debt reduction in H2 from increased profitability and working capital inflows. Net debt : EBITDA ratio will also reduce from increased profitability in H2

Future Fit: Strong early progress accelerating our strategy at pace

• Future Fit programme being delivered at pace: c$20m efficiencies delivered in H1, further c$20m expected in H2
• Optimised organisational design complete
• Operational Excellence programmes launched to deliver exceptional and consistent execution and drive efficiencies in the way we work
• Investing in digital capabilities and solutions
• Strategic growth plans in place in all business units, with a focus on building on our strong positions in energy transition and decarbonisation

Sustainability leadership through strategic action

• Strategy aligned with the delivery of engineering solutions for a net-zero future and enabling sustainable and resilient living, harnessing our significant technical expertise and breadth of capabilities to develop a global approach to energy transition & decarbonisation
• Demonstrating our commitment to the delivery of affordable and clean energy:
  • steering member of the Hydrogen Council
  • supporting the delivery of UN Sustainable Development Goal 7, utilising our resources and engaging with stakeholders to deliver the goal of affordable and clean energy
• Forming strategic partnerships to develop solutions to accelerate energy transition
  • partnering with Honeywell to develop renewable diesel and sustainable aviation fuel

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