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Half year results 2014 Andrew Wood
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► Earnings in line with guidance, strong cash flow ► Decline in earnings due to Australian market and
WorleyParsonsCord ► Hydrocarbons revenue flat, EBIT down ► Growth in chemicals partially offset minerals and metals
weakness ► Infrastructure revenue and EBIT down ► 40 significant contract awards ► Interim dividend of 34.0 cents per share ► Reiterate full year guidance
Overview
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► Underlying NPAT 1 of $100.7m, down 35%2
► Aggregated revenue3 of $3,793m, down 2%2, down 10%2 on constant currency basis
► Operating cash flow up 84% to $230m
► Gearing ratio remains strong at 25%, lower end of target range
Financial snapshot
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1 The underlying result for HY14 excludes the net fair value gain on acquisition of associates of $11.4m 2 Versus previous corresponding period 3 Refer to slide 31 in the Supplementary slides for the definition of Aggregated Revenue
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Performance remains good ► Total Recordable Case
Frequency Rate (TRCFR) for HY14 was 0.12 (FY13: 0.13)
We continue a number of programs across the Group including: Board and Executive
Committee structured HSE site visit program
Road safety program Optimising our approach to
safety in construction and contractor management
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Significant awards
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Hydrocarbons awards • Shell – Unconventional Oil
and Gas Global Enterprise Framework Agreement, global
• Kuwait Oil Company– 5 year contract for supply of program management services, Kuwait
Minerals, Metals & Chemicals awards • Invista – EPCM services for
hexamethylene diamine (HMD) project in the Shanghai Chemical Industrial Park in China, China
• Andes Iron SpA – feasibility study for Dominga project, Chile
Infrastructure awards • Consumers Energy – Karn units 1 and 2 SDA
and O&M services, US • Arriyadh Development Authority– Consultancy
services to execute Metro Development Strategy for Arriyadh (MEDSTAR), Saudi Arabia
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WorleyParsons’ performance continues to be underpinned by our growing long term contract base 19 New Improve contracts awarded
More than 290 Improve contracts globally
16 global/multi-region contracts
Improve contracts
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Strength in diversification
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37,500 people
166 offices
43 countries
2.9m workshare hours
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Half year results 2014 Simon Holt
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Financial Profile
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HY14 HY13 vs. HY13
Aggregated revenue1 ($m) 3,793 3,879 (2)%
Underlying EBIT ($m) 178 252 (29)%
Underlying EBIT margin 4.7% 6.5% (1.8)%
Underlying Net Profit After Tax ($m) 101 155 (35)%
Underlying NPAT margin 2.7% 4.0% (1.3)%
Basic EPS (cps) 40.8 63.0 (35)%
Operating cash flow 230 125 84%
Interim dividend (cps) 34.0 41.5 (18.1%)
1 Refer to slide 31 of the Supplementary slides for the definition of Aggregated revenue
Strong operating cash flow
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Aggregated revenue by type Professional services down, construction revenue grows
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$m HY14 HY13 vs. HY13
Aggregated revenue 3,793 3,879 (2)%
Professional services 3,167 3,267 (3)%
Construction and fabrication 482 444 9%
Procurement revenue at margin 139 154 (10)%
Other income 4 14 (68)%
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Aggregated revenue by region
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962
322
613 444
290 206
297 100
644 688
257 767 317
513
163 329
204
557
HY2013 ($m)
HY2014 ($m)
25%
18%
8% 7%
7%
14%
5% 4%
8% 9%
3% 5%
17% 15%
% of total aggregated revenue
16%
20%
8%
11%
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Diversification in earnings
► Top 10 customers deliver 34% of the gross margin
► Top 10 projects deliver 15% of the gross margin
► Top 10 locations deliver 65% of the operating EBIT
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Underlying Operating EBIT
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151
51 59 51 41
9 31
-3
58
87
47 68
5
61
1 25
12
66
HY2013 ($m)
HY2014 ($m)
% EBIT margin
15.7%
12.7%
15.8% 18.4%
9.7% 8.9%
11.5%
1.7%
14.2%
11.9%
4.3% 0.6%
10.6% 7.7%
(3.3)% 5.7%
9.0% 11.9%
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CSG segment EBIT
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258
51 77 62
448
251
16 69 37
373
Hydrocarbons(ex construction &
fabrication)
Construction &fabrication
Minerals, Metals &Chemicals
Infrastructure Total
HY2013 ($m)HY2014 ($m)
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Underlying NPAT ($m)
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155.1
100.7
(48.5)
(46.2)
(13.6) (6.2) 2.4
12.4 28.4 4.1
12.8
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EBIT result by segment ($m)
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448.1 373.0
(29.3) (35.2)
(11.2) (27.7) 28.3
HY13 Hydrocarbons(excl.
construction &fabrication)
Construction &fabrication
Minerals,Metals &
Chemicals
Infrastructure FX impact HY14
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Margin profile
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8.2% 6.6% 7.3% 6.5% 4.7%
9.0% 9.4% 7.1% 7.3%
8.6% 8.0%
7.2% 6.9%
FY10 FY11 FY12 FY13 FY14
EBIT % ► EBIT margin drop of 1.8%
► Primarily due to Australia, Cord, restructuring costs and one off TWPS benefit from prior year
► Hydrocarbons margins flat excluding the impact of construction and fabrication
► Construction and fabrication margin impacted by Cord
11.2% 11.2% 11.5%
3.4%
13.2% 12.1% 11.4% 7.5%
14.0%
4.3%
12.9% 9.2%
EBIT margin by CSG %
Construction & fabrication
Minerals, Metals & Chemicals
Infrastructure
12.6%
8.1%
13.0% 10.4%
Hydrocarbons (ex construction
& fabrication)
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Hydrocarbons
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HY14 HY13 Aggregated revenue $m 2,731.1 2,750.0
Professional services $m 2,151.0 2,181.3
Construction and fabrication $m 482.3 444.4
Procurement revenue with margin $m 96.8 123.3
Segment result $m 267.0 309.0
Segment margin % 9.8% 11.2%
► Revenue flat
► Segment margin down 1.4 % overall
► EBIT flat net of impact of Cord
► Rosenberg WorleyParsons increased Europe EBIT
309.0 267.0
(14.7) (8.7) (8.4) (46.4) (0.9) (7.2) (0.1) 19.6 2.3
22.5
HY13 ANZ ASCH CAN(excl.Cord)
Cord EUR LAM MENAI SSA USAC FXimpact
HY14
Operational EBIT by sector HY14 vs HY13 $m
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Minerals, Metals & Chemicals
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HY14 HY13 Aggregated revenue $m 571.1 583.2
Professional services $m 556.4 580.4
Procurement revenue with margin $m 14.6 2.7
Segment result $m 69.2 76.8
Segment margin % 12.1% 13.2%
► Downturn in ANZ due to project cancellations and completions
► SSA EBIT growth driven by TWP acquisition
► Canada EBIT growth driven by Iron Ore and Fertilizers
► Weakness in demand in LAM
76.8 69.2
(24.5) (1.4) (5.9) (2.2) 2.5
9.5 9.9 0.9 3.6
HY13 ANZ ASCH CAN EUR LAM MENAI SSA USAC FXimpact
HY14
Operational EBIT by sector HY14 vs HY13 $m
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Infrastructure
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HY14 HY13 Aggregated revenue $m 490.4 545.5
Professional services $m 459.6 505.3
Procurement revenue with margin $m 27.5 27.7
Other income $m 3.3 12.5
Segment result $m 36.8 62.3
Segment margin % 7.5% 11.4%
► General decline in ANZ
► $10.7M TWPS one off in HY13
► Downturn in Bulgaria Nuclear project
► CAN private sector demand increasing
62.3
36.8
(25.2)
(3.1) (4.5) (1.3) (0.2) 3.7 0.4 2.5 2.2
HY13 ANZ ASCH CAN EUR LAM MENAI SSA USAC FXimpact
HY14
Operational EBIT by sector HY14 vs HY13 $m
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Cash flow
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$m HY14 HY13 vs. HY13
EBIT 178 252 (74)
Depreciation and amortization 54 51 3
Interest and tax paid (54) (89) 35
Working capital/other 52 (89) 141
Net cash inflow from operating activities 230 125 105
Strong cash flow generation
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Gearing metrics
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HY14 FY13
Gearing ratio % 25% 25%
Facility utilisation % 54% 55%
Average cost of debt % 5.5% 5.5%
Average maturity (years) 4.2 3.8
Interest cover1 (times) 8.6x 10.6x
Net debt $m 741 742
Net Debt/EBITDA1 (times) 1.3x 1.2x
1 Rolling 12 month calculation
Gearing at lower end of target range
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Liquidity Financial capacity to support growth
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Liquidity summary $m HY14 FY13 vs. FY13
Loan & OD facilities 2,069 1,912 8%
Less: facilities utilized (1,116) (1,062) 5%
Available facilities 953 850 12%
Plus: cash 375 320 17%
Total liquidity 1,328 1,170 14%
Bonding facilities 940 862 9%
Bonding facility utilization 69% 71% (2%)
0
200
400
600
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Debt facility utilization profile $m
Utilized Not utilized
► US$520m US Bank Syndication refinance completed during the period
► Increase in average maturity from 3.8 years as at 30 June 2013 to 4.2 years
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Segment performance Andrew Wood
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Hydrocarbons ► Australian market continued to
contract Canada impacted by Cord and
softening activity in oil sands Improved EBIT for US business Timing of major project starts is
difficult to predict Opportunities in offshore -
deepwater in US, Africa and in Norwegian North Sea
UCOG opportunities in US, Canada, China and Australia
LNG opportunities in Canada, Australia and Africa
► Market outlook for Improve is robust, matching our strategic focus on this business line
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Ma’aden First Ore Feed to Mill
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Minerals, Metals & Chemicals Increased geographic
diversification Minerals and metals short
term market remains flat Growth in Canada and the
US largely through chemicals Strengthened position in
Africa LAM impacted by reduction in
copper related projects. Minerals and metals
customers currently focused on brownfields and sustaining capital work
Chemicals expenditure increasing in US
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Santiago Metro
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Infrastructure Merged Infrastructure &
Environment and Power sectors
► Cancellation of a nuclear project in Bulgaria
► Positive outlook in North America for Unconventional Oil & Gas related infrastructure
► Resource related developments in Western Canada and East Africa
► New build opportunities in emerging markets for power generation
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Summary
► First half earnings in line with guidance
► Improved earnings anticipated in second half to deliver full year
► Overhead reduction program implemented
► Business performance solid in most regions
► Balance sheet fundamentals remain strong
► In-depth review of business underway
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Commenting on the outlook for the WorleyParsons Group, Mr Andrew Wood said: “On current indications the Company expects to report underlying NPAT for FY2014 in line with guidance given in November 2013. Notwithstanding the impacts weaker than expected market conditions are having on our performance, the cost reduction program we implemented together with the momentum from recent contract awards should position us for medium term growth. The diversity of our business in terms of its geography, industry and service offering remains a fundamental strength.”
Group outlook Confirming guidance for FY14
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Supplementary information Half year results 2014
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Reconciliation Aggregated revenue*
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$m HY14 HY13
Revenue and other income 4,822.9 4,413.4
Procurement services at nil margin (1,306.4) (814.4)
Share of revenue from associates 289.5 283.9
Net gain on revaluation of investments (11.4) -
Interest income (2.0) (4.2)
Aggregated revenue* 3,792.6 3,878.7
*Aggregated revenue is defined as statutory revenue and other income plus share of revenue from associates, less procurement revenue at nil margin, interest income and net gain on revaluation of investments previously accounted for as equity accounted associates. The Directors of WorleyParsons Limited believe the disclosure of the share of revenue from associates provides additional information in relation to the financial performance of WorleyParsons Limited Group.
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Reconciliation Underlying* EBIT and NPAT
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$m HY14 HY13
EBIT 189.6 251.9
Net gain on revaluation of investments previously accounted for as equity accounted associates
(11.4) -
Underlying EBIT 178.2 251.9
NPAT 119.8 165.9
Non-controlling interests (7.7) (10.8)
Net gain on revaluation of investments previously accounted for as equity accounted associates
(11.4) -
Underlying NPAT 100.7 155.1
* The underlying result for HY14 excludes the net fair value gain on acquisition of associates of $11.4m
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Dividend history Interim dividend of 34.0 cents per share (HY13: 41.5 cps)
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FY10 FY11 FY12 FY13 HY14
Interim dividend (cps) 35.5 36.0 40.0 41.5 34.0
Franked % 100% 100% 79% 100% 25%
$m total 87.0 88.6 98.3 102.4 83.8
Final dividend (cps) 40.0 50.0 51.0 51.0
Franked % 47% 26% 61% 0%
$m total 98.0 122.8 125.3 125.7
Total (cps) 75.5 86.0 91.0 92.5
$m total 185.0 211.4 223.6 228.1
Payout ratio % 63.6% 70.8% 64.7% 70.8% 83.2% For
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FX translation impact
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Currency Annualized AUD $m NPAT translation impact of 1c ∆
AUD:USD 0.3AUD:GBP 0.4AUD:CAD 0.2
Currency HY14 FY13 HY∆
AUD:USD 92.3 102.7 -10.1%AUD:GBP 58.3 65.5 -11.0%AUD:CAD 96.3 103.1 -6.6%
-41 -32
-18
4 20
-50
-40
-30
-20
-10
0
10
20
30FY10 FY11 FY12 FY13 HY14
A$m
Group EBIT FX impact since FY10
80.0
85.0
90.0
95.0
100.0
105.0
110.0
Jan-
13
Feb-
13
Mar-1
3
Apr-1
3
May-
13
Jun-
13
Jul-1
3
Aug-
13
Sep-
13
Oct-1
3
Nov-
13
Dec-
13
Movement in major currencies
USD GBP CAD
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Key project awards VNIPIgazdobycha - engineering
contractor for Vladivostok LNG, Russia
MacKay Operating Corporation - EPC for MacKay River commercial project field facility phase 1, Canada
Sasol - IPMT for integrated GTL and ethane cracker complex, US
BP - Select engineering services for Sullom Voe gas sweetening project and ESP pipeline project, UK
GE Oil & Gas - supply of subsea templates for carbon dioxide injection project, Norway
Improve Awards ► Kuwait Oil Company - program
management contract, Kuwait ► EP PetroEcuador - inspection and
management of Esmeraldas refinery rehabilitation project, Ecuador
► Oil Search - Master Services Agreement 2 year extension, PNG
► Shell Refining Australia - project management and engineering services for Geelong Refinery, Australia
Hydrocarbons
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Hydrocarbons
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Key project awards Andes Iron SpA - feasibility
study for Dominga project, Chile
Invista - EPCM services for hexamethylene diamine (HMD) project in the Shanghai Chemical Industrial Park in China, China
Morobe Mining JV - owner’s engineer for Wafi-Golpu pre-feasibility study, PNG
Improve Awards ► Codelco - asset management
services, Chile
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Minerals, Metals & Chemicals
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Key project awards Corredor Do Desenvolvimento
Do Norte S.A. - project management and engineering services for Nacala rail corridor project, Mozambique
National Grid Property Holdings - management services for regeneration of former gas works, UK
Arriyadh Development Authority - consultancy services to execute Metro Development Strategy for Arriyadh (MEDSTAR), Saudi Arabia
Improve Awards ► Consumers Energy - Karn units
1 and 2 O&M services, US ► Tennessee Valley Authority -
installation of 3MW Diesel Generator at Sequoyah and Browns Ferry, US
► HOLTEC - installation of dry cask used fuel storage system, US
Infrastructure
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Contractual acronyms CY – Calendar year EDS – Engineering and Design Services E&P – Engineering and Procurement EPC – Engineering, Procurement and Construction EPCM – Engineering, Procurement and Construction Management ESA – Engineering Services Agreement ESP – Engineering Services Provider FEED – Front End Engineering Design FEL – Front End Loading GSA – General Services Agreement GTL – Gas to Liquids I&E – Infrastructure & Environment IPMT – Integrated Project Management Team LNG – Liquefied Natural Gas MM&C – Minerals, Metals & Chemicals MSA – Master Service Agreement O&M – Operations and Maintenance PCM – Procurement and Construction Management PMC – Project Management Consultancy
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