Worley earnings to ebb then flow
The company said this followed a quiet period of order flows earlier in the year.
"The flow pattern of [contract] awards will see earnings [in the 2013-14 financial year] being more heavily biased to the second half than in recent years," chief executive Andrew Wood told shareholders at Wednesday's annual meeting.
"That is, we expect our first-half earnings to be lower than those for the prior corresponding period.
"Despite ongoing challenges ... we expect our geographic and sector diversification to provide a solid foundation to deliver increased earnings in [the financial year]."
The group referred to the increasing seasonality of its earnings flows at recent shareholder meetings, and after warning shareholders of the soft outlook for earnings in the December half of 2013, net profit rose to $155.1 million from $151.9 million a year earlier.
The weak global economic outlook flagged on Tuesday by the International Monetary Fund - which cut its global growth forecast to 2.9 per cent from 3.1 per cent, while also trimming the forecast for 2014 - also fed through to concerns about the outlook for earnings.
Even so, WorleyParsons put acquisitions firmly on the agenda, along with pursuing organic growth, as it looks to the future.
Mr Wood said the company would take "advantage of acquisition opportunities that provide value for shareholders".
"The group is confident that its medium-term and long-term prospects remain positive based on our competitive position, our diversified operations and strong financial capacity."
Last financial year, Worley outlaid $100 million to acquire South African group TWP Holdings, along with Norwegian operator Bergen Group.
WorleyParsons shares closed 66¢ lower at $22.10 on Wednesday.
Frequently Asked Questions about this Article…
WorleyParsons flagged that earnings will decline in the December half of the 2013–14 financial year. The company said first‑half earnings are expected to be lower than those for the prior corresponding period because of a quiet period of order flows earlier in the year.
The company said the flow pattern of contract awards has changed, increasing the seasonality of its earnings. WorleyParsons expects earnings in the 2013–14 year to be more heavily biased to the second half than in recent years, meaning more revenue and profit will likely come later in the financial year.
Despite warning of a soft December‑half outlook, WorleyParsons reported net profit rose to $155.1 million from $151.9 million a year earlier.
The International Monetary Fund trimmed its global growth forecast to 2.9% (from 3.1%) and also reduced its 2014 forecast, which the company said fed through to concerns about the outlook for earnings. A weaker global economy can dampen demand for contract engineering work and influence timing of orders.
Yes. WorleyParsons has put acquisitions firmly on the agenda alongside organic growth. CEO Andrew Wood said the company will take advantage of acquisition opportunities that provide value for shareholders, and last financial year it spent $100 million to buy South African group TWP Holdings and also acquired Norwegian operator Bergen Group.
Andrew Wood said the group's geographic and sector diversification should provide a solid foundation to deliver increased earnings in the financial year. He also said the group is confident its medium‑term and long‑term prospects remain positive based on its competitive position, diversified operations and strong financial capacity.
On the day of the update, WorleyParsons shares closed 66 cents lower at $22.10.
Everyday investors should note WorleyParsons has reported increasing seasonality in its earnings flows, with a greater proportion of earnings now expected in the second half of the financial year. That means shorter‑term results (like the December half) can be weaker even if medium‑ and long‑term fundamentals—such as diversification and acquisition strategy—remain intact.
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