Judging by the early market reaction, there was a sense of euphoria about 2013-14 results from WorleyParsons (WOR) yesterday from investors. The final dividend was lifted and management was upbeat in the post release briefing.
It confirmed close to 1,800 jobs were cut or not filled in the year to June and management said it was "confident" about its prospects as second half profit margins perked up.
That saw the shares jump more than 9% to a day’s high of $18.77 after the company revealed what was a report without the negatives that the market has come to fear form the company over the past 18 months of downgrades, restructurings and losses.
By the close of trade yesterday the early enthusiasm had paled somewhat, but the shares still finished up 4.1% at $17.88.
Investors had realised that for all the lack of bad news and negatives from the company, the full year figures were nothing to write home about.
Underlying net profit after tax of $263 million fell 18% from the previous year and at the low end of WorleyParsons’ revised guidance of between $260 million and $300 million.
Net profit was down 23% to $249 million.
Group revenue rose 8.5% to $9.6 billion and while full year margins dipped 0.8% to 6.1%, margins in the second half rose sharply, from 4.7% a year ago to 7.6%, a three year high.
As a result directors were encouraged to pay a higher final dividend of 51 cents a share compared to just 10.5 cents a year ago.
That makes a total for the year of 85.0 cents a share compared with 92.5 cents a share for 2012-13.
WOR 1Y – WorleyParsons shares jump after higher final dividend
Another encouragement was the sharp improvement in operating cash flows strengthened to $550 million from $444 million in 2012-13.
WorleyParsons did not provide financial guidance for 2015, saying only that it was "confident" in its prospects.
Total employee numbers fell to 35,600 following 39,800 a year earlier as the company cut jobs across the group to save money.
The company said 1,200 jobs went in the six months to June 30.
But WorleyParsons did not specify exactly how much cost it has taken out of the business, or whether more cost cuts are expected in the future.
The engineering group announced a group restructure in April, claiming it would improve profit margins (which it seems to have done). But there were no targets given for likely or projected improvements in margins, or how deep the company would cut costs.
Chief Executive Officer of WorleyParsons, Andrew Wood, said: “The Company today reports earnings for the 12 months to 30 June 2014 in line with guidance we gave in November 2013 excluding the impact of costs of the organizational restructure.
“Aggregated revenue and NPAT were down when compared to FY2013 primarily due to the downturn in the Australian business, previously the major contributor to the Company’s earnings, and additional project costs in WorleyParsonsCord experienced in the first half. WorleyParsonsCord’s performance in the second half improved significantly with these legacy project issues having had no further impact on its results.
“The reorganization we announced in April is essentially complete and we are significantly progressed in achieving the objectives we set ourselves – that is to simplify the corporate structure, reduce overhead costs and enable our staff to deliver greater customer satisfaction. We have refocused our strategy to more aggressively leverage our broad and deep technical capabilities and our diverse geographic presence,” Mr Wood said.
