Shares in WorleyParsons (WOR) are in a trading halt at least until next Monday while the company prepares details of a major write down from “non-recurring charges” which will impact its 2015 financial results.
The mining and energy engineering services group asked for the trading halt yesterday morning after the shares had risen 4c in early trading to $11.45, despite another wave of selling across the wider market.
The trading halt request saw many investors and analysts wonder if the company was about to receive a takeover bid because of a sharp, unexplained 20% rise in the shares in the past month (possibly connected to the rebound in oil prices in the same time).
No other details were available yesterday, but the ’non-recurring charges’ must be material (ie have a big impact on the financial result), otherwise why ask for the suspension?
The announcement also means the company will be issuing new, lowered guidance for the year to June.
WOR 1Y – Mining services still weak for Worley
In February the company revealed a statutory net profit after tax of $104.3 million (down 7%) and an underlying after tax result was also $104.3 million for the 6 months to the end of December, up 3.6% on the previous corresponding period.
All the company gave as an outlook was its now standard advice that, "Having taken decisive action to ensure the business responds to market conditions and customer needs, the company is well positioned to manage through declines in market activity expected in the near term.
"Management will continue to balance the long-term sustainability of the business with the need to adjust our operations by reducing overheads. As in past years, the Company expects earnings to have a bias towards the second half,” directors said.
Obviously something has gone wrong in a rather big way – a contract or contracts have been lost or a client has gone broke, necessitating a one-off charge to the profit and loss account and a big profit downgrade is on the way.
