Worley Limited · ASX:WOR
Worley — WorleyParsons — H1 2014 Earnings Presentation
38 slides from Worley's earnings presentation, Feb 26, 2014
Slide 1: Half year results 2014
For personal use only Half year results 2014 Andrew Wood
Slide 2: Overview
Overview For personal use only ► 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 ► 4
Slide 3: Financial snapshot
Financial snapshot For personal use only ► 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 $230m ► Gearing ratio remains strong at 25%, lower end of target range 1 The underlying result for HY14
Slide 4: Performance remains good
For personal use only Performance remains good ► Total Recordable Case Frequency Rate (TRCFR) for HY14 was 0.12 (FY13: 0.13) We continue a number of programs across the Group including: Board and Executive Committee structured HSE site visit program Road safety program Optimising our approach
Slide 5: Significant awards
Significant awards For personal use only Hydrocarbons awards Minerals, Metals & Chemicals • Shell – Unconventional Oil awards and Gas Global Enterprise 10 13 • Invista – EPCM services for 40 Framework Agreement, global hexamethylene diamine • Kuwait Oil Company– 5 year (HMD) project in the Shanghai
Slide 6: Improve contracts
Improve contracts For personal use only WorleyParsons’ performance continues to be underpinned by our growing long term contract base 19 New Improve contracts awarded More than 290 Improve contracts globally 16 global/multi-region contracts 6
Slide 7: Strength in diversification
Strength in diversification For personal use only 37,500 166 43 people offices countries 2.9m workshare hours 7
Slide 8: Half year results 2014
For personal use only Half year results 2014 Simon Holt
Slide 9: Financial Profile
Financial Profile Strong operating cash flow For personal use only HY14 HY13 vs. HY13 Aggregated revenue1 ($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
Slide 10: Aggregated revenue by type
Aggregated revenue by type Professional services down, construction revenue grows For personal use only $m HY14 HY13 vs. HY13 Aggregated revenue 3,793 3,879 (2)% Professional services 3,167 3,267 (3)% Construction and fabrication 482 444 9% Procurement revenue at margin 139 154 (10)% Other income 4
Slide 11: Aggregated revenue by region
Aggregated revenue by region For personal use only HY2013 ($m) HY2014 ($m) 25% % of total aggregated revenue 20% 18% 17% 16% 15% 14% 962 11% 8% 8% 9% 688 7% 8% 7% 613 644 513 5% 5% 557 444 4% 767 3% 322 257 317 290 297 329 206 163 204 100 11
Slide 12: Diversification in earnings
Diversification in earnings For personal use only ► Top 10 customers deliver 34% of the gross margin ► Top 10 projects deliver 15% of the gross margin ► Top 10 locations deliver 65% of the operating EBIT 12
Slide 13: Underlying Operating EBIT
Underlying Operating EBIT For personal use only 15.7% HY2013 ($m) HY2014 ($m) % EBIT margin 12.7% 151 8.9% 11.9% 9.7% 11.9% 9.0% 15.8% 18.4% 11.5% 87 14.2% 68 10.6% 59 61 7.7% 66 51 58 51 47 4.3% 1.7% 41 5.7% 0.6% 31 5 9 25 (3.3)% 12 1 -3 13
Slide 14: CSG segment EBIT
CSG segment EBIT For personal use only HY2013 ($m) HY2014 ($m) 448 373 258 251 77 37 16 69 62 51 Hydrocarbons Construction & Minerals, Metals & Infrastructure Total (ex construction & fabrication Chemicals fabrication) 14
Slide 15: Underlying NPAT ($m)
Underlying NPAT ($m) For personal use only (48.5) (46.2) 12.8 28.4 4.1 12.4 (13.6) 155.1 2.4 (6.2) 100.7 15
Slide 16: EBIT result by segment ($m)
EBIT result by segment ($m) For personal use only (29.3) (35.2) (11.2) (27.7) 28.3 448.1 373.0 HY13 Hydrocarbons Construction & Minerals, Infrastructure FX impact HY14 (excl. fabrication Metals & construction & Chemicals fabrication) 16
Slide 17: Margin profile
Margin profile For personal use only EBIT % 8.6% 8.0% ► EBIT margin drop of 1.8% 7.2% 6.9% 9.0% 9.4% 7.1% 7.3% ► Primarily due to Australia, Cord, restructuring costs and one off 8.2% 7.3% TWPS benefit from prior year 6.6% 6.5% 4.7% FY10 FY11 FY12 FY13 FY14 ► Hydrocarbons margins flat EBIT margin by
Slide 18: Hydrocarbons
Hydrocarbons ► Revenue flat For personal use only HY14 HY13 Aggregated revenue $m 2,731.1 2,750.0 ► Segment margin down 1.4 % Professional services $m 2,151.0 2,181.3 overall Construction and fabrication $m 482.3 444.4 Procurement revenue with margin $m 96.8 123.3 ► EBIT flat net of impact of Cord S
Slide 19: Minerals, Metals & Chemicals
Minerals, Metals & Chemicals ► Downturn in ANZ due to project For personal use only HY14 HY13 Aggregated revenue $m 571.1 583.2 cancellations and completions Professional services $m 556.4 580.4 ► SSA EBIT growth driven by Procurement revenue with margin $m 14.6 2.7 TWP acquisition Segment result $m
Slide 20: Infrastructure
Infrastructure For personal use only HY14 HY13 ► General decline in ANZ Aggregated revenue $m 490.4 545.5 ► $10.7M TWPS one off in HY13 Professional services $m 459.6 505.3 Procurement revenue with margin $m 27.5 27.7 ► Downturn in Bulgaria Nuclear Other income $m 3.3 12.5 project Segment result $m
Slide 21: Cash flow
Cash flow Strong cash flow generation For personal use only $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 21
Slide 22: Gearing metrics
Gearing metrics Gearing at lower end of target range For personal use only 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 Ro
Slide 23: Liquidity
Liquidity Financial capacity to support growth For personal use only Liquidity summary $m HY14 FY13 vs. FY13 ► US$520m US Bank Loan & OD facilities 2,069 1,912 8% Syndication refinance Less: facilities utilized (1,116) (1,062) 5% completed during the period Available facilities 953 850 12% ► Increas
Slide 24: Segment performance
For personal use only Segment performance Andrew Wood
Slide 25: Hydrocarbons
Hydrocarbons ► Australian market continued to For personal use only 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 N
Slide 26: Minerals, Metals & Chemicals
Minerals, Metals & Chemicals For personal use only 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
Slide 27: Infrastructure
Infrastructure For personal use only 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
Slide 28: Summary
Summary For personal use only ► 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
Slide 29: Group outlook
Group outlook Confirming guidance for FY14 For personal use only 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 weak
Slide 30: Supplementary information
For personal use only Supplementary information Half year results 2014
Slide 31: Reconciliation: Aggregated revenue
Reconciliation Aggregated revenue* For personal use only $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 reve
Slide 32: Reconciliation: Underlying EBIT and NPAT
Reconciliation Underlying* EBIT and NPAT For personal use only $m HY14 HY13 EBIT 189.6 251.9 Net gain on revaluation of investments previously accounted for as equity accounted (11.4) - associates Underlying EBIT 178.2 251.9 NPAT 119.8 165.9 Non-controlling interests (7.7) (10.8) Net gain on revalua
Slide 33: Dividend history
Dividend history Interim dividend of 34.0 cents per share (HY13: 41.5 cps) For personal use only FY10 FY11 FY12 FY13 HY14 Interim dividend (cps) 35.5 36.0 40.0 41.5 34.0 Franked % 100% 100% 79% 100% 25% $m total 87.0 88.6 98.3 102.4 83.8 Final dividend (cps) 40.0 50.0 51.0 51.0 Franked % 47% 26% 61%
Slide 34: FX translation impact
FX translation impact Movement in major currencies Group EBIT FX impact since FY10 For personal use only FY10 FY11 FY12 FY13 HY14 110.0 30 20 105.0 10 4 20 100.0 0 -18 A$m 95.0 -10 -32 -20 -41 90.0 -30 85.0 -40 80.0 -50 Jul-13 Jan-13 Oct-13 Feb-13 Mar-13 Apr-13 Jun-13 Dec-13 May-13 Aug-13 Sep-13 Nov
Slide 35: Hydrocarbons key project awards
Hydrocarbons Hydrocarbons For personal use only Key project awards Improve Awards VNIPIgazdobycha - engineering ► Kuwait Oil Company - program contractor for Vladivostok LNG, management contract, Kuwait Russia ► EP PetroEcuador - inspection and MacKay Operating Corporation - management of Esmera
Slide 36: Minerals, Metals & Chemicals key project awards
Minerals, Metals & Chemicals For personal use only Key project awards Improve Awards Andes Iron SpA - feasibility ► Codelco - asset management study for Dominga project, services, Chile Chile Invista - EPCM services for hexamethylene diamine (HMD) project in the Shanghai Chemical Industrial Park
Slide 37: Infrastructure key project awards
Infrastructure For personal use only Key project awards Improve Awards Corredor Do Desenvolvimento ► Consumers Energy - Karn units Do Norte S.A. - project 1 and 2 O&M services, US management and engineering ► Tennessee Valley Authority - services for Nacala rail corridor installation of 3MW Diesel
Slide 38: Contractual acronyms
Contractual acronyms For personal use only 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 Ser