Worley slumps on downgrade

SHARES in WorleyParsons plummeted yesterday after the engineering group downgraded its full-year profit guidance.
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Kristie Batten

The company’s shares dropped 25% to $A16.21, earlier hitting a low of $16.18.

At the company’s annual general meeting last month it reiterated FY14 guidance of above the $322 million net profit after tax for FY13 but has revised that to $260-300 million.

First-half underlying NPAT is expected to be $90-110 million.

The company said the downgrade came after considering current trading results and a delay in market upturn.

Worley said the revised outcome reflected lower professional services revenue, particularly in Canada and Australia and, to a lesser extent, Latin America and the Middle East, despite outperformance in the US, southern Africa and Europe.

In terms of its Australian revenue, the company said the decline was greater than expected as hydrocarbon projects in northern Australia moved into final construction and delivery phases while the mining business remained weak.

The company’s results will also be hit by restructuring costs as it implements rigorous cost-cutting measures.

“Notwithstanding the impacts weaker than expected market conditions are having on our performance, the cost reduction program we are implementing, together with the momentum from recent contract awards should position us for medium-term growth,” Worley CEO Andrew Wood said.

“The diversity of our business in terms of its geography, industry sector and service offering remains a fundamental strength.”