WORLEY LIMITED (WORLEY) (ASX: WOR) HALF YEAR 2021 RESULTS

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    Delivering cash through a challenging environment and our business set up for the future
     Aggregated revenue $4,498 million, compared to $5,998 million
     Underlying EBITA $207 million, compared to $366 million
     Underlying NPATA $117 million, compared to $216 million
     Underlying operating cash flow $281 million, compared to $361 million
     Leverage at 1.8x compared to 1.8x at 30 June 2020
     Statutory result - revenue $4,876 million compared to $6,901 million and NPATA $60 million, compared to
    $154 million
     Operational cost savings target increased to $350 million by 30 June 2022 of which a total of $286 million has
    been delivered (all numbers on an annualized basis)
     ECR acquisition cost synergies of $181 million delivered; target of $190 million by 30 April 2021 (all numbers on
    an annualized basis)
     Board has resolved to pay an interim dividend of 25 cents per share
    All comparisons above are to prior corresponding period unless noted otherwise.
    Worley Limited, a leading global professional services company, today announced an underlying NPATA1 of
    $117 million for the six months ended 31 December 2020. Statutory NPATA was $60 million, compared to $154 million
    in the prior corresponding period while aggregated revenue decreased 25% to $4,498 million.
    Chief Executive Officer Chris Ashton said “The first half of FY2021 was a challenging period for our business. Global
    economic circumstances, including the COVID-19 pandemic, have impacted our customers, particularly demand in
    their end markets. As a result, we have seen project deferrals, mainly in the Americas, although minimal cancellations.
    Throughout the pandemic, the safety and well-being of our people remains our priority and we continue to provide a
    safe work environment for our office and field-based people.
    “Our underlying EBITA decreased 43% compared to prior period driven by volume reductions due to deferrals and site
    access restrictions. This period we have a larger proportion of lower-margin construction and fabrication work, which
    has historically been less variable in periods of downturn. EBITA and aggregated revenue were also lower due to the
    impact of the stronger Australian dollar.
    “We have generated underlying operating cash flow of $281 million and further strengthened our balance sheet. We
    have reduced our net debt to $1,206 million excluding lease liabilities, the lowest level of net debt since the ECR
    acquisition. Leverage (defined as net debt to EBITDA2
    ) has been maintained at 1.8x and gearing3
    is well below the
    target range of 25-35% at 18%.
    “Our backlog is $13.5 billion at 31 December 2020 compared to $16.8 billion at 30 June 2020. The impact of lower
    activity on long-term contracts and foreign exchange translation account for almost 75% of the backlog reduction. Our
    long-term contracts remain in place and there has been minimal impact from project cancellations. Backlog was also
    1 Net profit after tax excluding the post-tax impact of amortization of intangible assets acquired through business combinations
    2
    Earnings before interest, tax, depreciation and amortization as defined for debt covenant calculations
    3 Net debt to net debt + equity, excluding lease liabilities
    2
    impacted by the deferral of projects and contract awards. Customer discussions indicate deferred projects and
    historical activity levels on long-term contracts are likely to return as global economic circumstances improve.
    “Our 12-month factored sales pipeline4
    is increasing which includes the acceleration of sustainability opportunities at
    a more favorable gross margin percentage than our historical services. We have announced significant sustainability
    projects since the beginning of the calendar year.
    “The actions we have taken during the period have set the business up for the future. We have continued to deliver
    on our operational savings program, with a total of $286 million5
    savings delivered as at 31 December 2020, exceeding
    the original target of $275 million5
    . Today we announce the target is increased to $350 million5
    to be delivered by
    30 June 2022. The remaining savings are mostly related to our shared services program. In addition, the final savings
    from our ECR acquisition cost synergy program will be delivered by April 2021 in line with expectations. A total of
    $190 million5 of cost synergies will be delivered, exceeding our original target by $60 million5
    . We have delivered a
    total of $125 million5
    savings from these two cost savings programs in H1 FY21 which will flow into H2 FY21 and
    beyond.
    "Our sustainability pivot provides the structural framework for growth. The contribution of sustainability projects is
    already sizeable, delivering $1.2 billion of revenue in H1 FY21, around 30% of Group revenue. Energy transition and
    circular economy opportunities in particular are accelerating, and we have seen our factored sales pipeline4
    increase
    in this area from 11% to 18% of total opportunities since November 2020. We’re pleased with the level of work (and
    resulting margins) we’re winning in line with our strategy. Today we announced the award by Occidental Petroleum’s
    Low Carbon Ventures business 1PointFive for the industrial-scale commercialization of Direct Air Capture technology.
    This significant award supports our purpose of delivering a more sustainable world,” Mr. Ashton said.
    Dividend
    The Board resolved to pay an interim dividend of 25 cents per share, unfranked. The dividend will be paid on
    31 March 2021 with a record date of 2 March 2021.
    Group Outlook
    As a result of the global economic circumstances, including the COVID-19 pandemic, we have seen project deferrals,
    although minimal project cancellations. Customer discussions indicate deferred projects are likely to return as global
    economic circumstances improve.
    We believe our strong cash result, cost savings programs and our sustainability pivot have set the business up for the
    future. To date, we have delivered $286 million5 of operational savings and increased the target to $350 million5 by
    June 2022. We are also on track to deliver the $190 million5 ECR acquisition cost synergy target by April 2021.
    Our diversification will continue to be important as different sectors and regions recover at different rates. Our 12-
    month factored sales pipeline4
    is increasing which includes the acceleration of sustainability opportunities.
    We expect an improved EBITA in H2 FY21 compared to H1 FY21 due to recent project awards as well as the impact of
    cost reductions implemented in the first half having a full year impact.
    Our sustainability pivot provides the structural framework for growth and we are pleased with the level of work (and
    resulting margins) we are winning in line with our strategy. We are seeing sustainability opportunities accelerate
    across all our sectors and we are well positioned to capture these opportunities.

    4
    Factored for likelihood of project proceeding and award to Worley
    5 Annualized savings
    3
    Financial Outcomes (Compared to the previous corresponding period, unless noted otherwise)
    Statutory result
     Statutory revenue down 29% to $4,876 million from $6,901 million
     Statutory NPATA down 61% to $60 million from $154 million.
    Underlying result
     Aggregated revenue down 25% to $4,498 million from $5,998 million
     Underlying EBITA down 43% to $207 million from $366 million
     Underlying NPATA down 46% to $117 million from $216 million
     Underlying NPATA margin down 1 pp to 2.6% from 3.6%
     Underlying basic earnings per share (EPS) on NPATA down 46% to 22.3 cents from 41.5 cents.
    Other financial information
     Underlying operating cash flow was a net inflow of $281 million, down from $361 million.
     Gearing3
    reduced to 18.0% from 18.5% at June 2020.
     Net debt to EBITDA2 at 1.8 times, stable from 1.8 times at 30 June 2020.
     The average cost of debt6
    in the half decreased to 2.8% from 3.3%, with interest cover at 7.2 times, up from 6.3
    times at 30 June 2020.
     The Board resolved to pay an interim dividend of 25 cents per share, unfranked.
    Operating outcomes
    Safety performance
    The Total Recordable Case Frequency Rate for employees for the six months to 31 December was 0.15 (per 200,000
    work hours) compared to 0.16 at 30 June 2020. Worley has industry leading safety performance and we are
    committed to providing a respectful, safe and healthy environment where we support each other and our
    communities.
    Backlog
    Backlog at 31 December 2020 decreased to $13.5 billion from $16.8 billion at 30 June 2020. Site access restrictions
    have resulted in lower activity on long-term contracts, which under our backlog definition we effectively re-value by
    applying the most recent half-year work hours run rate over a 36-month period. The impact of lower activity on longterm contracts and foreign exchange translation account for almost 75% of the backlog reduction. Our long-term
    contracts remain in place and there has been minimal impact from project cancellations. Backlog was also impacted
    by the deferral of projects. Customer discussions indicate deferred projects and historical activity levels on long-term
    contracts are likely to return as global economic circumstances improve.
    Operating performance7
    Americas
    The Americas region reported aggregated revenue of $1,907 million and segment result of $117 million (H1 FY20:
    aggregated revenue of $3,044 million and segment result of $231 million). The segment margin decreased to 6.1%
    from 7.6%. Project deferrals as a result of global economic circumstances including the COVID-19 pandemic have
    impacted aggregated revenue. The margin decrease was primarily driven by US Field Services which was impacted by
    COVID-19 with key sites inaccessible and curtailed customer spending, as well as the fixed-cost nature of the business
    in Alaska which experienced reduced volume.
    6
    Calculated based on the weighted average of closing debt and rates at reporting date
    7
    Consistent with 30 June 2020, the Group has allocated certain global support costs into the segment result in the current period. Prior period
    professional services costs, construction and fabrication costs and global support costs were restated for comparative purposes. Total expenses on
    the Statement of Financial Performance and Other Comprehensive Income have not changed.
    4
    EMEA
    The Europe, Middle East and Africa region reported aggregated revenue of $1,667 million and segment result of
    $77 million (H1 FY20: aggregated revenue of $1,877 million and segment result of $118 million). Project deferrals as a
    result of global economic circumstances including the COVID-19 pandemic have impacted aggregated revenue. The
    segment margin decreased to 4.6% from 6.3%, as a result of significant volume reductions in the Middle East and
    Africa and the ramp down of a major project in Central Asia. Rate and price changes did not have a material impact on
    the segment result.
    The fabrication business in Norway had a strong performance, however at lower margin compared to the prior period
    due to the type of projects.
    APAC
    The Australia, Pacific, Asia and China region reported aggregated revenue of $924 million and segment result of
    $89 million (H1 FY20: aggregated revenue of $1,077 million and segment result of $107 million). The segment margin
    decreased slightly to 9.6% from 9.9%. Revenue in the Asia business, particularly Global Integrated Delivery (GID), was
    impacted by project completions and deferrals related to global economic circumstances including the COVID-19
    pandemic. APAC margin is higher than other regions due to a higher proportion of professional services work and the
    type of projects.
    Market sector performance8
    Energy
    The Energy sector, comprising upstream and midstream hydrocarbons as well as power, reported aggregated revenue
    of $2,127 million and segment result of $125 million with a margin of 5.9% (H1 FY20: aggregated revenue of
    $2,975 million, segment result of $226 million and segment margin of 7.6%). Energy's contribution to the Group’s
    aggregated revenue is 47% compared to 50% in the prior corresponding period.
    The Power sector showed resilience across all regions, contributing 6% to Group aggregated revenue with comparable
    margins to the prior period. The Power sector experienced growth in APAC as a result of the acquisition of the
    remaining 50% of TW Power Services Pty Limited (TWPS).
    Upstream and Midstream revenue and margin were impacted by project deferrals as a result of global economic
    circumstances including the COVID-19 pandemic, particularly in the Americas. In addition, margin was impacted by the
    change in projects in the Norway fabrication business noted above.
    Chemicals
    The Chemicals sector, comprising refining, petrochemicals and chemicals, reported aggregated revenue of
    $1,745 million and segment result of $113 million with a margin of 6.5% (H1 FY20: aggregated revenue of
    $2,193 million, segment result of $157 million and segment margin of 7.2%). Chemicals contributed 39% to the
    Group’s aggregated revenue, increasing from H1 FY20.
    Professional services margin in the Chemicals sector was relatively stable compared to H1 FY20, while construction
    and fabrication margin was impacted by COVID-19 with key sites inaccessible and curtailed customer spending.
    8 H1 FY20 market sector segment results have been restated in accordance with a review of project allocations to these sector groups
    5
    Resources
    The Resources sector, which includes mining, minerals and metals as well as infrastructure, reported aggregated
    revenue of $626 million and segment result of $45 million with a margin of 7.2% (H1 FY20: aggregated revenue of
    $830 million, segment result of $73 million and segment margin of 8.8%). Resources contribution to the Group’s
    aggregated revenue was 14%.
    The Resources sector revenue and margin were impacted primarily by COVID-19 related site shutdowns in Africa and
    the ramp down of procurement revenue with margin from a project in Latin America.
    Authorized for release by Nuala O’Leary, Group Company Secretary.

    courtesy of Bell Direct
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    DYOR

    i do not hold this share

    used to be a market darling , might be time to crunch the numbers ( and see what a fair price is )

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