By Pushkala Aripaka and Radhika Anilkumar
(Reuters) -Shares in Britain’s John Wood Group plummeted 40% on Friday after the engineering firm forecast negative cash flow for another year, after a series of updates that dashed hopes of a turnaround.
The company has had a tumultuous past few years. It faced activist investor pressure to consider a sale, two takeover proposals fell through, and it commissioned a review of its financials.
Wood said its free cash flow could be as much as negative $200 million this year, compared with its previous forecast of “significant” free cash flow. The company has not reported positive free cash flow since 2020, its annual reports showed.
Wood also projected lower underlying core-profit growth in 2025, and said that it will have to pay out about $150 million over the next three years related to legacy claims.
The FTSE-250 company is also taking steps to boost its financial controls and check costs, and said it was in talks with lenders about refinancing its debt ahead of a majority of loans maturing in October 2026.
Wood’s total net debt was $1.26 billion at June 30, 2024.
Its shares plunged to 38.8 pence by 1420 GMT, far from their 2013 high of 927 pence.
Wood’s update was “not good, but perhaps not as bad as implied by the share price,” Canaccord Genuity’s Alex Brooks said in a note.
Still, Wood said it expects to return to positive free cash flow next year, and some disposals will help support its balance sheet.
Even with uncertainties, “management being in a position to say it expects no material cash impact from the review can be a relief message needed to start moving forward,” Morgan Stanley analyst Guilherme Levy said in a note.
Wood, which provides consultation, management of assets and engineering services for the energy and materials sector, stands to lose about $270 million in market value, if Friday’s losses hold.
(Reporting by Radhika Anilkumar and Pushkala Aripaka in Bengaluru; Editing by Savio D’Souza and Susan Fenton)
