Last Thursday’s surprise move by engineering services group WorleyParsons (WOR) to ask for a trading halt for its shares while it worked out the impact of unidentified “non-recurring charges” was explained yesterday with a whacking big earnings downgrade and a slump in the share price.
As a result WorleyParsons yesterday revealed plans to slash its global workforce by 2,000 people and take $125 million in pre-tax charges this financial year related to “project provisions” due to tumbling commodity prices – especially oil.
WorleyParsons said its statutory second half earnings in fiscal 2015 would be around half its first half earnings – or around $50 million.
(The company reported a 7% fall in first-half net profit to $104.3 million in February.)
WorleyParsons said the cost cutting would help it generate future savings of between $75 million and $100 million.
The shares relisted yesterday morning and fell to a low of $10.05, down nearly 12%. They ended off 9.6% at $10.35.
WOR 1Y – WorleyParsons set to slash 2000 jobs
WorleyParsons said its margins had been eroded as work had decreased this year – particularly in North America – due to a sustained downturn in commodity prices that’s squeezing key customers.
Directors said the push to cut costs would eventually flow through to the bottom line, however, and would result in future annualised savings of between A$75 million and A$100 million.
