Engineering firm WorleyParsons (WOR) expects challenging conditions in global resources markets to continue.
The company’s annual profit dropped 23% in 2013/14, and chief executive Andrew Wood says the resources and energy markets in which it operates would present challenges in the short term.
But he did not provide shareholders at the company’s annual general meeting with specific earnings guidance.
“We expect the earnings for financial year 2015 to show a similar profile to financial year 2014, that is, biased to the second half,” is all Mr Wood told the meeting.
"We have taken, and continue to take, decisive action to improve margins and ensure the business is responding to market conditions and our customers’ needs.
"We are focused on realizing our objective of providing our shareholders a satisfactory return on their investments. We are confident in our prospects based on our competitive position, our diversified operations and our strong financial capacity,” he said.
Mr Wood told the meeting that key oil and gas customers "remain focused on prudent utilization of their capital and completing current projects".
“Therefore we believe that capex spend in Financial Year 2015 will be relatively flat particularly for the International Oil Companies.
"It is too soon to call what impact the recent decline in oil prices will have on our customers’ capex intentions, but we know they generally take a longer term view on their investments.
“However, regionally we expect increases in capex in financial year 2015 in the US, Canada, East Africa and the Middle East.
"In North America this is being driven by two significant areas of activity being LNG for export and the continuing development of unconventional oil and gas.
“We expect capex in minerals and metals to remain subdued with a focus on productivity from existing assets,” he said.
That’s a very similar summary to what the company experienced in 2013-14, with the big exception that it is now prepared for the impact of cost cutting.
Remember BHP Billiton’s Andrew McKenzie boasting on Monday about the high level of cost cuts and savings he was looking for up to 2017 – more than $US2.3 billion in actual cash savings, which can only come from cutting spending with contractors such as Worley.
WOR YTD – Life still tough for Worley
In the 2014 financial year the Group reported aggregated revenue of $7.364 billion, down 3% on financial year 2013.
Underlying net profit after tax was $263.4 million excluding one-off items. This was down 18% on the previous corresponding period largely due to the poor result in the first half of financial year 2014.
WorleyParsons reported an improvement in Group EBIT in the second half as management cut costs and axed more than 500 jobs across the group.
The company’s shares dipped 2.6% to close at $13.25.
