Wood Group woes: Shares plunge at Scottish heavyweight employing 6,000 UK and North Sea workers

The company, which employs more than 6,000 people in the UK, including about 4,500 supporting North Sea operations in Scotland, said a recent review of the business carried out by consultants at Deloitte had found “material weaknesses and failures” at the firm. Wood Group operates across 60 countries and has about 35,000 staff in total, and carries out engineering and consulting work on oil rigs, among other things. It also carries out engineering work on facilities for the pharmaceutical and mineral refining industries, and forms part of the FTSE 250.

Shares slumped by more than a third in Friday trading after the group revealed that its cash flow in 2024 was negative by as much as $200 million (£159m). Negative free cash flow means a company is spending more money than it is generating.

Wood Group had previously forecast “significant” positive free cash flow for the year. As a result, it is extending a cost-cutting programme which already stripped out some $60m (£48m) from its outgoings in 2024, to save another $85m this year.

Eventually, it hopes to have saved $145m by 2026, compared with what it would have spent without the plan.

When approached on whether this would include job cuts, the company declined to comment. The cost cuts include cancelling bonuses for all employees, including top executives, and “actively managing working capital at year end”.

In November, Wood announced that Deloitte would carry out a review of the company after it had to write off several large projects.

In its latest update, the company said that following the review, it will try to “strengthen significantly the group’s financial culture, governance and controls in light of material identified weaknesses and failures.

“Following these actions, the business will be on a firmer operational footing, but cash generation has yet to materialise and financial strength needs significant improvement.”

Chief executive Ken Gilmartin said it was a “difficult announcement” and said the company’s financial performance was “disappointing”.

The firm will look to focus more on its most profitable markets, such as oil and gas to improve its finances. It already has significant operations in the US and the Middle East fossil fuel industries.

Gilmartin said the Deloitte review “clearly gives us areas to focus on and we are initiating steps now to further improve our financial culture, governance and controls”.

He added: “We have announced further actions to address the cost base of the business to right size Wood for the future, and have laid out a very clear route to positive free cash flow in 2026.”

While Wood has not finalised its financial results for 2024 yet, it said it expects profit growth to have slowed.

Last summer, a Dubai suitor walked away from a £1.56 billion potential takeover of its Scottish rival.

In lunchtime trading on Friday, Wood shares were down 25.3p, or almost 39 per cent, at just over 40p each.

Russ Mould, investment director at AJ Bell, noted: “Wood Group crashed on a smorgasbord of bad news. An independent review of the business by Deloitte is still ongoing but it has already found ‘material weaknesses and failures’. Fourth quarter trading was below expectations and staff aren’t getting their annual bonus.

“It guided for negative free cash flow in 2025 and it needs to find a solution to refinance debt that matures next year. It’s a lot of bad news to stomach, hence why investors have been quick to hit the sell button on the shares.”