The $4.5 billion acquisition of Jacobs ECR 16 months ago has paid off for resources engineering and services group Worley in the year to June.
The company yesterday revealed a final dividend on top of an interim (a rare event in the current reporting season) after an 80% lift in underlying earnings. And most of that came from the contribution from ECR for the full year.
Worley reported underlying earnings of $743 million in 2019-20 from revenue up 75% to $11.3 billion, thanks to the contribution from ECR.
It will pay a final dividend of 25 cents a share, up from the 15 cents a share final a year ago. With the 25 cents a share interim, Worley’s total payout for the year is 50 cents a share, up from 27.5 cents for 2018-19.
Worley benefited from both the revenue and earnings contribution from ECR, and also the cost cuts.
“The integration of ECR was substantially completed during the year and we have delivered acquisition cost synergies of $177 million at 30 June 2020,” Worley’s CEO Chris Ashton said in Wednesday’s statement.
“We have increased the target to $190 million, to be delivered by April 2021.”
The synergies are on top of another $275 million it hopes to save from current operations.
With cost-cutting from the merger to continue this year the ECR contribution will again be valuable as Worley faces a resources sector where spending and especially investment from oil and gas has been cut heavily.
The company recognised that in a wordy, but cautious outlook statement:
“The current economic circumstances have led to a rapidly changing environment for Worley’s business, making the near- to medium-term outlook more difficult to predict than in previous years.
“We are a more resilient business following the completion of the acquisition of ECR with increased diversification across geographies and sectors as well as greater exposure to our customers’ operating expenditures.
“Our diversification, particularly given our presence in North America, will continue to be important as different sectors and regions recover at different rates. We have managed business fundamentals with agility and we will continue to adjust as the global disruption evolves.
“In FY2021 we will continue to prioritize protecting our people, maintaining financial and operational integrity and supporting our customers, to create value for all our shareholders.
“We are on track to deliver the $190 million ECR acquisition cost synergy target as well as the $275 million operational savings target as we accelerate our transformation.
“We will consider balance sheet capacity for high return opportunities in line with our transformation strategy,” Worley said.
But no actual numerical guidance for the year ahead.
Worley shares rose 6.4% to $9.69.
