Energy services giant Wood PLC has sold its nuclear business for £250 million to the American engineering group Jacobs in order to reduce its debts.
The Aberdeen-based firm announced the sale as it reported an increase in operating profit in the first half of the year.
Wood's nuclear business includes the UK's largest independent nuclear research and testing facilities. It deals with the building, servicing and decommissioning of reactors, primarily in the UK. It recently secured a £400 million contract for the scrapping of Dounreay.
The group made an operating profit of £115 million ($139m) over the six months, up from $125m (£103m). It said profit growth was led by activities in energy markets in the eastern hemisphere and its environment and infrastructure operations in North America, together with cost synergies.
Wood said revenue in the first half of the year was £3.9 billion ($4.7bn), down from £4bn ($4.9bn). Meanwhile, adjusted EBITDA was £317m ($384m), up from $293m. Its interim dividend was up 0.9% to 11.4 cents from 11.3c.
Chief executive Robin Watson said: "Strong margin improvement and profit growth in the first half was led by activities in energy markets in the eastern hemisphere and our environment and infrastructure operations in North America, together with cost synergies.
“We also made substantial progress on our non core asset disposal programme and have agreed the sale of our nuclear business for $305m, with completion anticipated in Q1 2020. This will result in significant deleveraging and bring us close to our target leverage.
“With 87% of 2019 revenues delivered or secured we remain confident in our full year outlook and guidance is unchanged. Looking further ahead, we remain well positioned for growth across the energy and built environment markets."
David Kemp, chief financial officer, added: "The sale of our nuclear business follows other recent divestments and marks a significant step towards achieving Wood's target leverage policy.
Although our nuclear business is a strong UK player and has performed well, we see better opportunities to develop clear global leadership positions across other parts of our business."
David Barclay, head of office at Brewin Dolphin Aberdeen, said: “Debt levels have been the main cause of concern about Wood – today’s announcement of the sale of its nuclear division will go some way towards assuaging those fears.
"Overall, it’s a positive set of results for the company after a choppy 2019 – Wood has swung back to profit and has good visibility of future earnings. Investors will have one eye on the slight fall in revenues and a marginally smaller order book, but the business remains in an encouraging position.”
