Engineering firm WorleyParsons expects challenging conditions in global resources markets to continue.
The company’s annual profit dropped 23 per cent in 2013/14, and chief executive Andrew Wood says the resources and energy markets in which it operates would continue to present challenges in the short term.
But he did not provide shareholders at the company’s annual general meeting with specific earnings guidance for the current year.
“We expect the earnings for financial year 2015 to show a similar profile to financial year 2014, that is, biased to the second half,” he told the meeting.
The company’s key oil and gas customers were focussed on cutting spending and completing current projects, Mr Wood said.
WorleyParsons’ hydrocarbons business, including oil and gas, generates more than than 70 per cent of its revenue.
“Therefore we believe that capex spend in financial year 2015 will be relatively flat particularly for the international oil companies,” Mr Wood said.
“It is too soon to call what impact the recent decline in oil prices will have on our customers’ capex intentions, but we know they generally take a longer term view on their investments.”
Mr Wood did say he expected increased spending on oil and gas in some regions this year, including North America – due to shale developments and increasing LNG exports.
A restructure and cost cutting measures, including the axing of 1,700 WorleyParsons jobs in the last year, was made in response to depressed demand, and the company’s share price has tumbled 40 per cent in the past 12 months amid several profit warnings.
But analysts have also been upgrading their earnings forecasts for the group.
“We have taken, and continue to take, decisive action to improve margins and ensure the business is responding to market conditions and our customers needs,” Mr Wood said.
Mr Wood was optimistic about the company’s new advisory business Advisian – from which it wants to generate one third of overall earnings within a decade.
“We see a gap in the market for a business that applies strategic and business thinking … with the extraordinarily broad and deep technical and delivery capabilities that reside within the company,” he said.