WorleyParsons slumps on profit downgrade

Shares drop 20%, reduced professional services revenue to hit profit, Aust decline 'greater than expected'.

Shares in WorleyParsons (WOR) have plunged after the group downgraded its full-year earnings forecast after experiencing a delay in upturn in its markets.

At 1035 AEDT, WorleyParsons shares dropped 20.33% to $17.20, against a benchmark index fall of 0.23%.

WorleyParsons shares fell as low as $17.01 in early trade. 

In a statement to the Australian Securities Exchange, the group said it expects underlying net profit after tax for fiscal 2014 in the range of $260 million to $300 million.

The group had earlier expected NPAT of $322 million.

It now expects first-half underlying NPAT in the range of $90 million to $110 million. 

WorleyParsons blamed reduced professional services revenue and its rigorous cost reduction program for the revision.

The reduction in professional services revenue is particularly evident in Australia and Canada, and to a lesser extent in Latin America and the Middle East, the group said.

"The decline in the Australian business has been greater than expected, as hydrocarbons projects in northern Australia move into the final construction and delivery phase and the minerals and metals business remains weak," WorleyParsons said.

Major project deferrals and additional costs in the construction and fabrication business have affected the Canadian business, the group said.

WorleyParsons said outperformance in the United States, southern Africa and Europe will not be able to offset the decline elsewhere as previously expected.

Benefits of the cost reduction program, net of restructuring, will begin to be realised in the second half of the financial year, WorleyParsons said.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles