Worley (ASX:WOR) reported a 27% increase in underlying profit for the 2024 financial year. However, the engineering services group's share price only rose by 2.5%, falling short of analysts' forecasts and leaving shares down 17% year-to-date.
Underlying net profit after tax reached $416 million, up from $348 million but below market expectations of $422 million. The result excluded a one-off $58 million write-down related to Ecuadorian services.
Underlying EBITA rose 24% to $751 million, and revenue increased 18% to $11.6 billion. The company declared a final dividend of 25 cents per share, unchanged from the previous year.
Worley attributed the earnings rise to increased professional services revenue, improved project mix, and rate improvements. However, the announcement's muted 2025 outlook raised concerns about the share price's resilience compared to other companies like Lovisa.
Worley expects "more moderate levels" of growth compared to the previous year, suggesting a potential downgrade. Its order backlog is down 2% due to spending cuts and project cancellations.
CEO Chris Ashton acknowledged delays in Venture Global's CP2 project and scope reductions in Anglo American's Woodsmith project. He warned that customers are becoming more pragmatic about carbon emissions, delaying or scaling back sustainability projects.
Ashton emphasized that customers remain committed to net zero but are taking a pragmatic approach to achieving it. Geopolitical shifts, energy dilemmas, and project economics are delaying some customer capital expenditure decisions in the short term.
The question is whether this short-term impact will extend to revenue and earnings growth in 2024-25.
