Worley Shares Fall as Scale of Middle East Conflict Impact Announced

Worley shares (ASX:WOR) are down today, as the company put a number to the impact of escalating Middle East tensions, warning shareholders that ongoing regional conflict will shave A$30–40 million from FY26 underlying EBITA and likely prevent any earnings growth next year. The disclosure sent shares down 6.13% to A$11.10 ahead of the close, marking one of the ASX 200‘s worst performers for the session and extending the stock’s year-to-date decline to 11.6%.

Price Targets

Worley’s share price fell sharply following the guidance update, with the stock touching intraday lows below the $11 level at A$10.96. The decline in WOR today significantly underperformed the broader ASX 200 index, which is battling with the break even line into the final half hour of trading.

Conflict Delays Projects But Cancellations Remain Zero

Worley’s update centres on the operational and commercial impact of the protracted Middle East conflict on its regional project portfolio. The company disclosed that delays to the commencement and award of new projects, combined with timeline extensions on existing work, will result in an estimated adverse impact of A$30–40 million on FY26 underlying EBITA. Management now says it is unlikely to achieve underlying EBITA growth in the coming financial year, a marked shift from prior expectations.

Importantly, Worley emphasised that no project cancellations have occurred in the Middle East to date. Existing projects continue to progress, albeit with delays driven by safety considerations, logistics constraints, and supply chain disruptions rather than demand destruction. The company has been deploying its global Operational Centres located outside the Middle East to maintain service delivery and minimise further impact, leveraging its distributed footprint to work around regional bottlenecks.

Despite the earnings headwind, Worley reaffirmed key elements of its FY26 guidance. The company maintained its underlying EBITA margin target of 9.0–9.5% excluding procurement, signalling confidence in pricing discipline, project mix, and cost control even amid disruption. Management also reiterated that aggregated revenue growth in FY26 is still targeted above FY25 levels, suggesting the top line will continue expanding despite the profitability squeeze.

Strategic Response Focuses on Business Continuity and Asset Restoration

Worley has stepped in to assist customers with crisis-response work, focusing on restoring damaged assets and supporting strategic projects linked to the conflict. This includes business continuity planning, emergency repairs, and maintaining critical infrastructure operations. While this work may support utilisation rates in the near term, the higher-margin opportunities associated with new project awards have been pushed back as clients defer investment decisions amid uncertainty.

The company had previously flagged its Middle East exposure in late March, noting it was monitoring the situation closely and ensuring staff safety. Worley does not operate directly in Iran, Iraq, or Israel, but maintains exposure through customer assets and regional logistics networks. The progression from qualitative caution in March to a quantified A$30–40 million impact in April suggests risks have crystallised faster than initially anticipated.

Looking beyond the immediate disruption, Worley highlighted potential medium-to-long-term opportunities arising from the conflict. The company expects increased global focus on national security, particularly for alternative energy sources and resource diversification. Regional pipeline and export infrastructure projects are anticipated to accelerate as countries seek to enhance energy security and reduce dependence on vulnerable supply routes.

Capital Management Continues Despite Headwinds

Separately from the conflict-related update, Worley has maintained its on-market share buyback programme. As of early March 2026, the company had repurchased approximately 27.5 million shares and continues to lodge daily ASX updates on buyback activity. The ongoing capital management initiative signals that management views the balance sheet as robust and believes the stock offers value on a through-cycle basis, even as near-term earnings face pressure.

The buyback also provides incremental earnings-per-share accretion, which becomes more powerful following the post-announcement sell-off. However, markets will watch closely for any slowdown or suspension of repurchases, which could indicate deteriorating cash flow visibility or a need to preserve liquidity if the conflict extends further.

Investor Day to Provide Granular Detail on Path Forward

Worley has scheduled its Investor Day for 14 May 2026, where management plans to provide more detailed guidance on project phasing, backlog composition, and regional growth offsets. The event will be closely watched for evidence that non-Middle East segments can compensate for the regional shortfall and for confirmation that the company can defend its 9.0–9.5% margin target despite mix headwinds.

Key questions for management include how much of the A$30–40 million impact represents deferred versus permanently lost earnings, what proportion of delayed projects are expected to commence in FY27, and whether pricing or scope adjustments will be required on existing contracts. The company has committed to keeping shareholders updated on any material changes to its outlook as the situation evolves.

Broader Sector Feeling Gulf Crisis Heat

Worley’s announcement fits within a broader pattern of Australian and New Zealand corporates quantifying Middle East-related earnings hits. Airlines, logistics providers, and industrial firms have all reported headwinds ranging from elevated fuel costs to freight disruptions and project delays. The systemic nature of the impact suggests markets may apply higher risk premia to all companies with meaningful Middle East exposure, compressing valuation multiples across the affected cohort.

At the same time, the conflict has driven volatility in oil and commodity markets, with implications for the broader energy services sector. While near-term disruption weighs on execution and margins, the structural case for energy security, infrastructure resilience, and transition investment remains intact and may ultimately expand Worley’s addressable opportunity set.

Outlook Hinges on Conflict Trajectory and Order Intake

The path for Worley shares from here depends heavily on two factors: the duration and intensity of the Middle East conflict, and the company’s ability to demonstrate strong order intake in other regions. If the situation stabilises faster than expected, the realised EBITA hit could trend toward the lower end of the A$30–40 million range and deferred projects could be released back into the pipeline. Conversely, further escalation or extended delays could push more work into FY27 or beyond, potentially requiring another guidance revision.

Markets will scrutinise book-to-bill ratios and backlog disclosures in coming quarters for signs that “no cancellations” is evolving into contract downsizing or repricing. Strong wins in energy transition, export infrastructure, and national security-related projects outside the Middle East would help re-anchor the bull case and demonstrate that Worley’s diversified platform can absorb regional shocks.

The near-term outlook for Worley is clearly challenged, with FY26 now shaping up as a pause year for earnings growth rather than the anticipated step-up. Yet the absence of project cancellations, maintained margin guidance, ongoing buybacks, and medium-term structural tailwinds suggest the disruption may prove temporary rather than terminal. Whether the 14 May Investor Day can restore confidence or merely confirm a prolonged period of elevated uncertainty will determine if the current sell-off represents a buying opportunity or the start of a more sustained de-rating.