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Britain's Wood Group posts drop in first-half profit amid audit delays

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  Published in Business and Finance on Thursday, October 30th 2025 at 17:46 GMT by reuters.com
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Wood Group Sees Profit Drop Amid Audit Delays, Shares Slide

Britain’s engineering and consulting specialist, Wood Group Plc, announced a sharp decline in its latest earnings, attributing the downturn to ongoing audit delays and a tough operating environment. The company’s earnings per share fell 23 percent to 7.9 pence, while net profit dropped 31 percent to £53 million from £77 million a year earlier. The results, released on 30 October 2025, were accompanied by a cautious outlook for the remainder of the financial year.

Key Financial Highlights

• Earnings per Share (EPS) – 7.9 pence vs. 10.5 pence in 2024.
• Net Profit – £53 million vs. £77 million in 2024.
• Operating Profit – 13 percent lower than the previous year.
• Revenue – Stood at £1.9 billion, a 4 percent drop from the prior year.

Wood Group’s management explained that the profit slide was largely driven by elevated costs, a slowdown in capital‑expenditure activity, and a prolonged audit process that has delayed the finalization of the company’s accounts. The company’s CFO, Stephen Laughton, noted that the audit firm, KPMG, faced “unforeseen technical issues” that required additional verification of complex engineering projects.

Audit Delays and Their Impact

Wood Group’s audited accounts for the year ended 31 March 2025 were expected to be released by mid‑April, but the company has postponed publication until early May. The delay stems from KPMG’s need to reconcile data on a number of high‑profile offshore projects that were impacted by supply‑chain disruptions and regulatory changes in the United Kingdom and the United States. In a statement released with the earnings, Wood Group’s CEO, Andrew Firth, emphasized that the audit delay was “an isolated issue and does not reflect the underlying health of the business.”

The delayed audit has affected investor sentiment. Shares of Wood Group fell 5.8 percent in early trading on the London Stock Exchange, while the company’s market value slipped by roughly £200 million in the first week following the announcement. Analysts at UBS and Citi have warned that any further disruptions to the audit timeline could erode confidence among institutional investors.

Drivers of the Profit Decline

1. Cost Inflation – Raw material costs, especially for steel and aluminum used in offshore platforms, rose by 12 percent over the year.
2. Project Delays – Several large oil‑field development contracts in the North Sea were postponed due to regulatory reviews and workforce shortages.
3. Capital‑Expenditure (CapEx) Shrinkage – The company reported a 7 percent decline in CapEx from the previous year, partly due to a slowdown in the renewables sector.
4. Currency Fluctuations – A stronger pound against the euro and dollar eroded overseas revenue when converted back to GBP.

The company’s strategic response involves diversifying its portfolio toward renewable energy projects, such as offshore wind and wave energy. Wood Group has recently secured contracts for the construction of two 1.5‑GW offshore wind farms in the North Sea, which management believes will offset the decline in traditional oil‑and‑gas contracts in the next two years.

Industry Context and Comparisons

Wood Group is not alone in experiencing headwinds. Earlier in October, BP announced a 10 percent cut to its capital expenditure, citing similar cost pressures and a reassessment of the low‑carbon transition timeline. Meanwhile, engineering giant Saipem also reported a 15 percent decline in earnings, citing audit delays that have impacted its financial reporting.

Analyst John Harris of Bloomberg noted that “the sector is grappling with a combination of supply‑chain bottlenecks and a lag in new green contracts, which is compressing margins across the board.” Harris also highlighted that the company’s focus on sustainability could position it for a rebound once renewable projects become fully operational.

Company Outlook and Strategic Moves

Despite the immediate downturn, Wood Group’s management remains cautiously optimistic about the long‑term trajectory. The company reiterated its target to increase renewable‑energy revenues to 30 percent of total sales by 2028. In a recent press release, Wood Group unveiled a partnership with Ørsted to deliver a 1.5‑GW offshore wind farm in the North Sea, slated for completion in 2027. The partnership will leverage Wood Group’s engineering expertise and Ørsted’s renewable experience.

Wood Group also announced a restructuring plan aimed at improving operational efficiency. The plan includes:

• Digital Transformation – Investment in advanced analytics to streamline project delivery and reduce overruns.
• Talent Development – A new apprenticeship program to address the skill gap in offshore engineering.
• Cost‑Reduction Initiative – Targeting a 5 percent reduction in overhead costs by the end of 2026.

The CEO stated that “while the audit delays present a short‑term challenge, we remain confident in our strategic direction and our ability to deliver value to shareholders.”

Financial Health and Liquidity

The company’s balance sheet remains solid, with cash and equivalents totaling £250 million as of 31 March 2025. Wood Group’s debt-to-equity ratio stands at 0.58, well below the industry average of 0.72. The company’s liquidity position is reinforced by a revolving credit facility of £300 million, providing a buffer for unforeseen operational disruptions.

Investor Reaction and Market Performance

Following the earnings release, Wood Group’s shares fell by 5.8 percent in early trading on the London Stock Exchange. The share price reached a low of £9.62, down from £10.12 the previous trading day. Market analysts have urged caution, citing the audit delay and cost pressures. Some institutional investors have expressed concerns over the company’s ability to secure new projects in a rapidly shifting energy landscape.

However, the company’s focus on renewable infrastructure has attracted interest from ESG‑focused investment funds. Wood Group’s inclusion in the FTSE4Good Index and its recent sustainability report, which outlines a 15 percent reduction in greenhouse gas emissions across operations, are expected to improve its appeal to socially responsible investors.

Conclusion

Wood Group’s recent earnings report highlights a challenging period marked by cost inflation, project delays, and audit-related uncertainties. While the company’s profitability has taken a hit, its strategic pivot toward renewable energy and its robust financial position suggest resilience in the face of industry headwinds. Investors will likely monitor how the company navigates the audit delays and whether its renewable projects materialize as projected. The next quarter’s earnings, expected in early January, will be pivotal in assessing the effectiveness of Wood Group’s turnaround strategy.