WorleyParsons Limited (WorleyParsons) has reported revenues of $2.5 billion for the first half of fiscal 2010, down 20.1%, compared with the revenues of $3.1 billion in the year-ago period. It also reported a net profit after tax of $138 million for the first half of fiscal 2010, down 30.1%, compared with the net profit after tax of $197.5 million in the year-ago period.
EBITDA of $252.2 million (decrease of 28.9%)
Variable market conditions experienced through first half
Middle Eastern operations performed strongly
LNG capability continues to develop
100% renewal on all expiring major long term contracts
Australian infrastructure capability strengthened with acquisition of Evans & Peck
Market entry into Brazil with CNEC Engenharia acquisition
Interim dividend of 35.5 cents per share, fully franked
Indications of improved conditions in the second half and beyond
The result was earned on aggregated revenue of $2,548.1 million and EBITDA of $252.2 million. The EBITDA margin for the group was 9.9%, down from 10.9% in the previous corresponding period. The effective corporate tax rate reduced to 25.2% as a result of an increased weighting of earnings from lower taxed jurisdictions, contributing to a net margin result of 5.4% compared to 6.1% in the previous corresponding period.
Basic earnings per share (EPS) were 56.8 cents, a decrease of 30.4% from the 81.6 cents per share reported in the previous corresponding period.
Operating cash flow for the period was $147.5 million compared to $234.5 million in the previous corresponding period. This cash flow result included a $32.3 million increase in tax paid compared to the previous corresponding period and a $5.2 million reduction in borrowing costs.
The $88.5 million acquisition of Australian based Evans & Peck was funded by a cash payment of $37.5 million and the issue of new shares to the value of $51.0 million. Net debt at 31 December 2009 was $566.4 million, with the company’s gearing ratio (calculated on a net debt to net debt + equity basis) at 24.5%. The acquisition of Brazilian entity CNEC Engenharia for a cash consideration of BRL170.0 million (around AUD110.0 million), will be funded from existing debt facilities.
The average cost of debt for the period was 5.0%. Twelve months cash interest cover (EBITDA to total interest expense) was 13.4 times (June 2009: 14.1 times). The company’s cash position at December 31, 2009 was $159.9 million (June 2009: $173.8 million).
The company’s available committed debt facilities reduced during the half year from $1,376.1 million to $1,260.9 million. The reduction is attributable to a consolidation of facilities and the effect of the stronger Australian dollar on the translation of facility limits.
The committed debt facilities have an average maturity of 3.9 years (June 2009: 4.1 years), with $328.4 million (26%) maturing within one year, $393.5 million (31%) between one and four years and $539.0 million (43%) beyond four years. Facility utilization at December 31, 2009 was 58.0%. In addition, the company maintained bank guarantees and letter of credit facilities of $433.0 million with utilization of these facilities at 31 December 2009 of 57.3%.
John Grill, CEO of WorleyParsons, said: “The variable conditions we experienced in a number of markets in the second half of the last financial year continued into the first half of this financial year and are reflected in the reduced earnings for the period. While this has been a challenging period for the company, I believe the result was reasonable in the circumstances. We are expecting a stronger second half and continue to be optimistic about the medium and long term prospects for our business.
“Our Power business, particularly in the US, and our business servicing the US hydrocarbons downstream sector were affected by a reduction in the scope of many existing projects and delays in the commencement of projects that had been awarded. The performance of these businesses had an adverse impact on our half year result, as did the appreciation of the Australian dollar through the
“However, in some parts of our business, in particular the Middle East, we have continued to experience very good operating conditions and our performance has been ahead of expectations. Our business in Canadian oil sands is performing better than it did in the second half of the last financial year and we are starting to see more encouraging signs. Our Infrastructure operations also performed well in the period.”
“Over the last few years we have focused on the development of capability to support new LNG projects for our clients across the globe. When combined with our existing strong track record on established facilities, we now have an increasing capability across all facets of the LNG market.”
“WorleyParsons’ performance continues to be supported by our extensive and resilient long-term contracting base which we refer to as Improve. We were successful in renewing all major long term contracts which expired during the period including 5 year contract extensions for Syncrude and Imperial Oil in Canada and the Tennessee Valley Authority in the US. We have had a continuous
relationship with these customers for 19 years. The existing 15 year relationship held by the TransfieldWorley joint venture with Woodside Petroleum, as operator of the North West Shelf assets, in Australia was also renewed for an additional 4 years.”
“Our investment in all areas of sustainability continues to be well received by customers, leading to numerous projects and opportunities with a significant EcoNomics component. During the period we released a comprehensive report on the status of carbon capture and storage projects for the Global Carbon Capture and Storage Institute.”
“In the Minerals & Metals market, we are seeing some encouraging signs that will provide support for stronger performance in the second half of this year and into the next financial year.”
“We also announced the acquisition of Australian infrastructure advisory firm Evans & Peck and Brazilian services group CNEC Engenharia. Evans & Peck provides high level advisory services across the infrastructure market and will assist us to better position WorleyParsons in the early phases of major infrastructure developments. The CNEC Engenharia acquisition provides us with a strong operating base in what we believe will be a key market for WorleyParsons in future years.”
“Our current headcount is around 28,400 (29,100 including CNEC) with the trend and indications positive for additional growth in key markets through the second half of the financial year.”