August 20, 2019 @ 9:59 by Steven Hugill
An energy sector engineer employing workers across the North East is selling its nuclear business in a £250 million deal to cut debts.
Wood Group has reached an agreement with a subsidiary of US consultant Jacobs for the operation.
The deal, which is subject to Competition and Markets Authority approval, is expected to be completed by early next year.
Wood’s nuclear business designs, delivers and maintains strategic and complex nuclear assets for customers primarily in the UK, but despite recording a $14.2 million (£11.74 million) pre-tax profit in 2018, bosses say they see “better opportunities” elsewhere.
They added the move will help the company reduce debts augmented by a previous takeover deal for rival Amec Foster Wheeler, which strengthened Wood’s North East presence.
Wood has offices in Newcastle, Gateshead and Stockton, and a further two sites in Darlington. It is also known for managing operations at the Central Area Transmission System gas terminal, in Seal Sands, near Billingham.
David Kemp, Wood’s chief financial officer, said: “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.”
Its nuclear sell-off was revealed today (Tuesday, August 20) as the business reported its financial results for the six months to June 30.
According to its figures, the company enjoyed a 479.2 per cent operating profit increase to $139 million (£115 million) as it benefited from improved margins across energy and built environment markets.
Robin Watson, chief executive, said the business was “well positioned for growth”, adding its nuclear division sale will help its progress.
He 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.
“The sale of our nuclear business…will result in significant deleveraging and bring us close to our target leverage.
“With 87 per cent of 2019 revenues delivered or secured, we remain confident in our full-year outlook and guidance is unchanged.
“We remain well positioned for growth across the energy and built environment markets.”