WorleyParsons position itself for medium term growth

Professional services company WorleyParsons Limited announced statutory (NPAT) of $112.1 million and underlying NPAT of $100.7 million for the six months to 31 December 2013. 

This was in line with guidance issued in November 2013 and is down 35% on the previous corresponding period.

Revenue and EBIT were down across the Australian business due to reduced hydrocarbons activity, ongoing weakness in minerals and metals and the resulting contraction in resource related infrastructure projects. Cord experienced a decline in revenue and was impacted by additional costs on a project that was completed in the first quarter of FY2014.

The Company’s decline in earnings was further impacted by restructuring costs of $13.6 million. This was the result of a reduction in the number of people employed due to the downturn in the Australian market and the rigorous cost reduction program across the entire Company announced during the first half of FY2014. This included a reduction in excess of 500 people from overhead roles. The Company now employs approximately 37,500 people operating out of 166 offices across 43 countries.

Operating cash flow for the period increased to $230 million, compared to $125 million in the previous corresponding period due to the completion of a number of projects with lagging cash flow, and a continued focus on cash management.

Andrew Wood said: “We are undertaking an in-depth review to position WorleyParsons for future earnings growth by improving our delivery for our customers and offering a more competitive value proposition. This review is well underway, and we will advise more details once it is complete.”

The directors have resolved to pay an interim dividend of 34.0 cents per share, 25% franked. This equates to a payout ratio of 83% of underlying NPAT. The dividend will be paid on 31 March 2014 with a record date of 7 March 2014.

Statutory revenue and other income of $4,823 million was up 9% and aggregated revenue of $3,793 million was down 2%. Underlying EBIT of $178.2 million was down 29% and Underlying EBIT margin on aggregated revenue of 4.7% is down from 6.5%;

Commenting on the outlook for the WorleyParsons, Andrew Wood said: “On current indications the Company expects to report underlying NPAT for FY2014 in line with guidance given in November 2013. Notwithstanding the impacts weaker than expected market conditions are having on our performance, the cost reduction program we implemented together with the momentum from recent contract awards should position us for medium term growth. The diversity of our business in terms of its geography, industry and service offering remains a fundamental strength.”

 

Press Release, February 26, 2014

 

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