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.