WorleyParsons shares have been hammered, with investors unwilling to back the engineering group despite a solid profit and its insistence it was well placed financially.

The company was also criticised for not announcing a share buyback while talking up the prospects of using its cash on acquisitions. Net profit for the half year to December 31 was $104.3 million and the company maintained its partly franked interim dividend at 34 cent a share.

That was considered a resilient result given 90 per cent of Worley’s pre-tax earnings in result came from work on projects in the beleaguered oil and gas sector.

That was also a major reason for the share price dive, with the market believing a fall in investment by energy companies in hydrocarbon projects because of the oil price crash would soon hit Worley.

Chief executive Andrew Wood said while he expected revenue and gross margin declines in the second half, he also expects better earnings because of past cost cutting.

The large restructure Worley carried out last year when it cut more than 4000 jobs to combat the end of the mining boom meant a lot of the difficult work was already done, he said.

“The company is well positioned to manage through the decline in market activity expected in the near term,” he said, with gearing at a comfortable 26.9 per cent.

Some global oil and gas projects were being delayed, but capital spending by Worley’s major customers was flat until 2016 and there was still a strong portfolio of work for the group.

He also said the current tough market meant now was a good time to be making opportunistic acquisitions, but not capital returns to shareholders.

“We will look into the future as cashflow and the balance sheet supports it as to whether other methods of capital returns to shareholders are appropriate,” he said.

That was disappointing, said Credit Suisse analyst Mark Samter, who said that with few capex requirements he thought investing in itself through share buybacks was a better use of capital.

He saw the share price fall as due to Worley’s weak net cashflow, which fell 66 per cent to $78 million, and its other two struggling segments: infrastructure and minerals, metal and chemicals contributing little earnings.

WORLEYPARSONS DEFENDS PROFITS IN TOUGH MARKET

• Half year net profit of $104.3m, down seven pct from $112.1m
• Revenue of $4.42b, down 8.4 pct from $4.82b
• Partly franked interim dividend of 34 cents a share, unchanged

By Greg Roberts