WorleyParsons Heading for Full Year Loss

Thursday, August 13th, 2015
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Engineering and construction group WorleyParsons is likely to slide into the red as it takes a $200 million hit in challenging conditions.

The company has flagged the massive non-cash writedown of goodwill assets after a review of carrying values.

“This comprehensive review will reflect the expected ongoing challenging market conditions and will be finalised around the time of the full year results release,” WorleyParsons said.

The anticipated writedown represents around 10 per cent of the value of its goodwill, which is a valuation of a company’s reputation and brand.

WorleyParsons said in May its earnings during the second half of 2014/15 were likely to be about 50 per cent weaker than the first half profit of $104 million.

Morningstar analyst Ross MacMillan said the company was heading for a $10 million full year net loss.

“You’re likely to see WorleyParsons produce a small loss, somewhere around the break-even mark in statutory terms,” he said.

But in terms of underlying earnings, Mr MacMillan forecasts WorleyParsons will earn $190 million for the full year.

Worley and its peers had been forced to write down intangible and fixed assets as they were unlikely to make returns which justified their past acquisitions, he said.

WorleyParsons has employees in 46 countries and has axed 6,000 jobs since 2013, the majority in North America working in the oil and gas sector.

The global company, which announced 2,000 job cuts in May after a drop in oil prices, has previously said job cuts and downsizing would save between $75 million and $100 million each year from from 2015/16.

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