WorleyParsons shares surge after a big jump in profits defies strong local currency

ENGINEERING giant WorleyParsons has recovered from a weak first-half to post a 25 per cent jump in full-year net profit.

By InvestSMART · 25 Aug 2011

By InvestSMART ·
25 Aug 2011

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ENGINEERING giant WorleyParsons has recovered from a weak first-half to post a 25 per cent jump in full-year net profit.

And despite the company being adversely affected by the high Australian dollar and the instability in the Middle East, long-serving chief executive John Grill buoyed investors by tipping "good growth" in underlying earnings next year.

"It is an encouraging sign that the company is on a sound growth footing," Mr Grill said.

Shares in WorleyParsons surged $2.37, or 10 per cent, to $26.07 at the close of trade yesterday.

Net profit rose from $291.1 million to $364.2 million.

WorleyParsons, which has contracts on high-profile projects including the BP-led development of Iraq's super-giant Rumaila oilfield and Queensland's Curtis LNG facility, increased its revenue by 12 per cent from $5.1 billion to $5.68 billion in the year to June 30.

Mr Grill said multinational companies were increasingly contracting on a worldwide basis via global service agreements, which bodes well for the company, which employs more than 35,000 staff in 43 countries.

The group's full year net profit was negatively impacted by the higher Australian dollar, which took $31.5 million in value, WorleyParsons said.

Another $15 million was lost because of instability in the Middle East and natural disasters in other markets.

Among WorleyParsons' business segments, all posted higher earnings than in the previous year, with the exception of its minerals and metals business.

"WorleyParsons is one of only a handful of contractors with the capability to provide the depth and breadth of services our large multinational customers require on a global basis," Mr Grill said.

WorleyParsons has global agreements in place with BP, Rio Tinto, Chevron, Du Pont, Vale and Anglo American.

The company declared a 50? final dividend, to be paid on September 27.

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Frequently Asked Questions about this Article…

Why did WorleyParsons shares surge after the results announcement?

WorleyParsons shares jumped after the company reported a stronger full-year result — a 25% rise in net profit — and CEO John Grill tipped "good growth" in underlying earnings next year. The market reacted to the profit beat and the optimistic outlook, sending the shares up $2.37 (10%) to $26.07 at the close.

How much profit and revenue did WorleyParsons report for the year to June 30?

For the year to June 30 WorleyParsons reported full-year net profit rising from $291.1 million to $364.2 million and revenue increasing by 12% from $5.1 billion to $5.68 billion.

What effect did the strong Australian dollar and regional instability have on WorleyParsons earnings?

The company said the higher Australian dollar reduced full-year net profit by $31.5 million, and instability in the Middle East plus natural disasters in other markets cost a further $15 million.

What did WorleyParsons' management say about future earnings and growth prospects?

Long‑serving CEO John Grill described the results as an encouraging sign the company is on a sound growth footing and tipped "good growth" in underlying earnings next year, noting multinational clients are increasingly using global service agreements which should support demand.

Which WorleyParsons business segments performed best, and were there any underperformers?

Most of WorleyParsons' business segments posted higher earnings year‑on‑year, with the exception of its minerals and metals business, which did not increase earnings.

What major projects and global clients support WorleyParsons' revenue?

WorleyParsons has contracts on high‑profile projects such as the BP‑led development of Iraq's Rumaila oilfield and Queensland's Curtis LNG facility, and it holds global agreements with major clients including BP, Rio Tinto, Chevron, DuPont, Vale and Anglo American.

Does WorleyParsons pay a dividend and when is it payable?

The company declared a final dividend (amount stated in the announcement) that is scheduled to be paid on September 27, according to the report.

What key risks and strengths should everyday investors note about WorleyParsons?

Key strengths highlighted include rising revenue and profit, global service agreements with major multinationals, and a workforce of more than 35,000 staff in 43 countries. Risks cited in the report include exposure to currency movements (the strong Australian dollar), instability in regions such as the Middle East, and natural‑disaster impacts in certain markets.