1min read
PREVIOUS ARTICLE Reporting season analysis: Bor... NEXT ARTICLE Reporting season analysis: Atl...

REPORTING SEASON: WorleyParsons Ltd (WOR)

Brought to you by CommSec

 

Figure 1: WorleyParsons Ltd 12 month chart

 

WorleyParsons (WOR) held back by slowing mining industry

·         WorleyParsons (WOR), a professional services provider to the resources and energy sectors, posted a 22.7% slump in FY14 NPAT to $249.1 million. Less demand for its services due to an investment slowdown in both the Australian and Canadian mining industries held back the result most

·         WOR warned of the fall in earnings in Nov 2013, which resulted in a 25% slide in its share price on 20 Nov. The FY14 result was still at the lower end of the company’s guidance for underlying profit ($260-$300m) although its bottom line improved in 2H14. Its Hydrocarbons services business (extraction and processing of oil and gas) contributed 73% of total revenue; however was a drag with earnings in all markets except Europe falling over the year

·         As has been a common theme in the industry, WOR implemented a rigorous cost reduction program which included 1,200 job cuts over 2H14 (1,700 over FY14) and was hit by a $35.4m ‘reorganization charge’. WOR still employs 35,600 people across 46 countries

·         A $0.51 per share 20.5% franked dividend was declared, payable to eligible shareholders on 30 September. WOR has a 4.8% dividend yield. Looking ahead, no concrete financial guidance was provided by WOR. Cost management will continue to be a priority together with a focus on its core business for growth opportunities

·         WOR shares are improving this calendar year for the first time since 2009 and are up on today’s result. While margins worsened over the year, they improved substantially over the 2H14 to 7.6%. Note that WOR’s share price is still down 47% from highs hit in 2011

 

You can see all of CommSec’s reporting season analysis by clicking here.

Steven Daghlian, Market Analyst,