Worley Limited · ASX:WOR
Worley — WorleyParsons — H1 2015 Earnings Presentation
47 slides from Worley's earnings presentation, Feb 25, 2015
Slide 1: Half year results 2015
For personal use only Half year results 2015 Andrew Wood
Slide 2: Overview
Overview Performed well despite increasingly volatile conditions For personal use only ► 3.6% underlying NPAT growth ► Margin improvement achieved as promised ► MTG and ANI acquisitions completed ► “Getting better at what we do” ► Low crude price has minimal impact on HY2015 results ► Interim divide
Slide 3: Financial snapshot
Financial snapshot For personal use only ► Aggregated revenue1 of $3,614m, down 4.7%2 ► Minimal revenue benefit from FX ► Underlying NPAT3 of $104.3m, up 3.6%2 ► Underlying EBIT margin up to 5.0% ► Operating cash flow down to $78m ► Gearing at the bottom of target range 1 Refer to slide 35 in the Su
Slide 4: OneWay to Zero Harm
OneWayTM to Zero Harm For personal use only Performance Improving > Total Recordable Case Frequency Rate (TRCFR) for HY2015 is 0.09 (HY2014: 0.12) Update on Zero Harm Initiatives > Continued focus on land transport > Implementing step change in field HSE HSE Awards > WorleyParsons Cord - Awarded the
Slide 5: Half year results 2015
For personal use only Half year results 2015 Simon Holt
Slide 6: Group Financial Profile
Group Financial Profile Improved margin and earnings growth For personal use only HY2015 HY2014 vs. HY2014 Aggregated revenue1 ($m) 3,613.7 3,792.6 (4.7%) Underlying EBIT2 ($m) 180.8 178.2 1.5% Underlying EBIT margin 5.0% 4.7% 0.3% Underlying Net Profit After Tax2 ($m) 104.3 100.7 3.6% Underlying NP
Slide 7: Underlying NPAT by business line
Underlying NPAT ($m) By business line For personal use only Reflects changes in contribution to EBIT at constant currency (5.6) 1.7 3.4 (14.0) 13.6 3.8 0.7 100.7 104.3 7
Slide 8: Underlying NPAT by sector
Underlying NPAT ($m) By sector For personal use only Reflects changes in contribution to EBIT at constant currency 36.7 (27.7) (24.1) 13.6 1.7 3.4 100.7 104.3 8
Slide 9: Margin profile
Margin profile Improved EBIT and NPAT margins For personal use only Group Underlying EBIT Margin % 8.0% 7.2% 6.9% 6.1% 9.4% 1H prior years 7.1% 7.3% 7.6% 2H prior years 1H current year 7.3% % Full year 6.6% 6.5% 4.7% 5.0% FY2011 FY2012 FY2013 FY2014 FY2015 Group Underlying NPAT Margin % 5.1% 4.7% 4.
Slide 10: Segment results
For personal use only Half year results 2015 Segment results
Slide 11: Operational EBIT
Operational EBIT Business Line earnings For personal use only Operational EBIT $m 287.2 275.9 227.2 226.0 37.6 22.7 23.7 27.5 (1.3) (0.3) Services Major Projects Improve Development Total Operational EBIT margin by Business Line % 1H FY2014 1H FY2015 8.0% 8.0% 7.6% 7.6% 7.6% 7.6% 6.0% 5.9% (2.6%) (0
Slide 12: Services
Services For personal use only HY2015 HY2014 vs. HY2014 ► Revenue flat in a Aggregated revenue $m 2,808.0 2,843.7 (1%) difficult market Professional services $m 2,209.7 2,243.0 (1%) ► Margins Construction and fabrication $m 438.9 482.3 (9%) unchanged at Procurement revenue with margin $m 157.9 114.0
Slide 13: Major Projects
Major Projects For personal use only HY2015 HY2014 vs. HY2014 Aggregated revenue $m 377.6 496.9 (24%) Professional services $m 360.4 479.7 (25%) Procurement revenue with margin $m 17.2 17.2 0% Segment result $m 22.7 37.6 (40%) Segment margin % 6.0% 7.6% (1.6%) ► Revenue declined 24% ► Margin compres
Slide 14: Improve
Improve For personal use only HY2015 HY2014 vs. HY2014 Aggregated revenue $m 363.4 402.8 (10%) Professional services $m 361.6 397.5 (9%) Procurement revenue with margin $m 1.8 5.3 (66%) Segment result $m 27.5 23.7 16% Segment margin % 7.6% 5.9% 1.7% ► Heavy oil sands customers reduced their sustaini
Slide 15: Development
Development For personal use only HY2015 HY2014 vs. HY2014 Aggregated revenue $m 64.7 49.2 32% Professional services $m 59.4 46.8 27% Procurement revenue with margin $m 5.3 2.4 121% Segment result $m (0.3) (1.3) 77% Segment margin % (0.5%) (2.6%) 2.1% ► Acquisition of MTG completed ► Advisian contri
Slide 16: Operational EBIT by Sector
Operational EBIT by Sector Hydrocarbons EBIT improvement For personal use only Operational EBIT by CSG $m 287.2 275.9 247.5 207.6 28.4 23.8 55.8 0.0 Hydrocarbons Minerals, Metals & Infrastructure Total Chemicals Operational EBIT margin by CSG % 1H FY2014 1H FY2015 9.8% 9.8% 8.5% 7.6% 7.6% 5.8% 6.3%
Slide 17: Hydrocarbons
Hydrocarbons For personal use only HY2015 HY2014 ► Sector margin recovery Aggregated revenue $m 2,696.9 2,731.1 across Major Projects, Professional services $m 2,118.8 2,151.0 Services and Improve Construction and fabrication $m 438.9 482.3 ► Decline in Major Projects Procurement revenue with margin
Slide 18: Minerals, Metals & Chemicals
Minerals, Metals & Chemicals For personal use only HY2015 HY2014 ► Overall sector margins under Aggregated revenue $m 447.4 571.1 pressure Professional services $m 441.5 556.4 ► Margins and project activity declined across Major Procurement revenue with margin $m 5.8 14.6 Projects and Services Other
Slide 19: Infrastructure
Infrastructure ► Break even result due to poor For personal use only HY2015 HY2014 Aggregated revenue $m 469.4 490.4 performance in Services Professional services $m 430.8 459.6 ► Gross margin declined across Procurement revenue with margin $m 37.5 27.5 all Services regions except Other income $m 1.
Slide 20: Group revenue and EBIT by region
Group revenue and EBIT By region For personal use only Aggregated revenue $m 44% 40% 25% 24% 24% 22% 1,645 1,445 6% 5% 6% 4% 944 871 839 878 162 216 203 204 APAC NA LAM EURMENA SSA HY2014 HY2015 % of total aggregated revenue Operational EBIT $m 11.7% 6.5% 6.8% 10.9% 8.0% 7.5% 110.3 107.2 94.7 98.9 7
Slide 21: Capital Management
For personal use only Half year results 2015 Capital Management
Slide 22: Cash flow
Cash flow Fair cash flow generation For personal use only $m HY2015 HY2014 Underlying EBIT 181 178 Depreciation and amortization 53 54 Interest and tax paid (104) (54) Working capital/other (52) 52 Net cash inflow from operating activities 78 230 22
Slide 23: Gearing metrics
Gearing metrics Gearing within target range For personal use only HY2015 HY2014 Gearing ratio % 26.9% 24.6% Facility utilization1 % 62.7% 53.9% Average cost of debt % 4.8% 5.5% Average maturity (years) 3.9 4.2 Interest cover2 (times) 8.7x 8.6x Net Debt/EBITDA (times) 1.6x 1.3x 1 Loans, finance lease
Slide 24: Liquidity
Liquidity Financial capacity to support growth For personal use only Liquidity summary HY2015 FY2014 Loan, finance lease & overdraft facilities ($m) 1,988 1,783 Less: facilities utilized* ($m) (1,247) (897) Available facilities ($m) 741 886 Plus: cash ($m) 422 369 Total liquidity ($m) 1,163 1,255 Bo
Slide 25: Half year results 2015
For personal use only Half year results 2015 Andrew Wood
Slide 26: Getting better at what we do
Getting better at what we do For personal use only What we delivered Core Program on track Workflow simplification well underway WorleyParsons Academy, Houston Campus opened eBis integrated solutions moving into implementation phase Global Delivery Center Acceleration Program elevated to Group
Slide 27: Step outs
Step outs For personal use only What we delivered Dennis Finn appointed to lead Advisian from September 2014 MTG Acquisition completed in October 2014 Advisian to be established as standalone business line Digital Enterprises key wins 27
Slide 28: Group Leadership Team
Group Leadership Team For personal use only 28
Slide 29: Business line outlook
Business line outlook For personal use only ► Services Opportunities in North America Cord activity levels remain high APAC supported by long term contracts in Australia and Chemicals in China Activity levels growing in the Middle East, Europe stabilizing MM&C weak outlook for SSA, Nigeria
Slide 30: Business line outlook
Business line outlook For personal use only ► Major Projects – long duration projects 2 recent awards in Alaska Expect oil related projects to be subject to additional review Global framework agreements, such as BASF underpin pursuits Pursuing opportunities across all sectors ► Improve – lon
Slide 31: Sector outlook
Sector outlook For personal use only HYDROCARBONS • Customers reconsidering investment plans in the near term • Modest declines expected in revenue and gross margin • Benefits of actions taken and further overhead reductions expected to temper effect on earnings MINERALS, METALS & CHEMICALS • Condit
Slide 32: Group outlook
Group outlook For personal use only Having taken decisive action to ensure the business responds to market conditions and customer needs, the company is well positioned to manage through declines in market activity expected in the near term. Management will continue to balance the long-term sustaina
Slide 33: Q&A
For personal use only Q&A Half year results 2015
Slide 34: Supplementary information
For personal use only Supplementary information Half year results 2015
Slide 35: Revenue reconciliation
Revenue reconciliation For personal use only $m HY2015 HY2014 Revenue and other income 4,418.9 4,822.9 Procurement services at nil margin (1,057.3) (1,306.4) Share of revenue from associates 255.4 289.5 Net gain on revaluation of investments - (11.4) Interest income (3.3) (2.0) Aggregated revenue* 3
Slide 36: Aggregated revenue by type
Aggregated revenue by type For personal use only $m HY2015 HY2014 vs. HY2014 Aggregated revenue 3,613.7 3,792.6 (5%) Professional services 2,991.1 3,167.0 (6%) Construction and fabrication 438.9 482.3 (9%) Procurement revenue at margin 182.2 138.9 31% Other income 1.5 4.4 (66%) 36
Slide 37: Reconciliation
Reconciliation For personal use only $m HY2015 HY2014 EBIT 180.8 189.6 Less net gain on revaluation of investments previously - (11.4) accounted for as equity accounted associates Underlying EBIT 180.8 178.2 NPAT 113.1 119.8 Less non-controlling interests (8.8) (7.7) Less net gain on revaluation of
Slide 38: Dividend history
Dividend history Interim dividend of 34.0 cps (HY2014: 34.0 cps) For personal use only FY2011 FY2012 FY2013 FY2014 HY2015 Interim dividend (cps) 36.0 40.0 41.5 34.0 34.0 Franked % 100% 79% 100% 25% 7.9% $m total 88.6 98.3 102.4 83.9 84.1 Final dividend (cps) 50.0 51.0 51.0 51.0 Franked % 26% 61% 0%
Slide 39: Foreign Exchange
Foreign Exchange For personal use only Total EBIT Currency Average exchange rate Spot exchange rate USD movement movement Pegged BRL 1.78% 5.97% BRL CAD 2.76% (6.41%) AUD CNY (2.59%) (13.91%) GBP (6.09%) (5.55%) NOK 4.90% 4.41% USD USD (3.35%) (13.97%) CAD Other NOK CNY GBP 39
Slide 40: FX translation impact
FX translation impact For personal use only Movement in major currencies Group EBIT FX Impact Since FY2011 FY2011 FY2012 FY2013 FY2014 HY2015 110.0 45 35 105.0 25 41 15 5 A$m 4 4 100.0 -5 -18 -15 -32 -25 95.0 -35 -45 90.0 Jan-14 Jul-14 Aug-14 May-14 Oct-14 Nov-14 Sep-14 Dec-14 Feb-14 Mar-14 Apr-14 J
Slide 41: Strength in diversification
Strength in diversification For personal use only 35,100 157 46 people offices countries 41
Slide 42: Diversification in earnings
Diversification in earnings For personal use only ► Top 10 customers deliver 33% of the gross margin ► Top 10 projects deliver 15% of the gross margin ► Top 10 locations deliver 68% of the operating EBIT ► ASX announcements through FY2014 and HY2015 accounted for only 17% of revenue 42
Slide 43: Significant awards
Significant awards For personal use only Revenue Revenue $145+ million 31 $1.5+ billion 10 45 9 8 Revenue 43 $150+ million
Slide 44: IOC Capital Expenditure
IOC Capital Expenditure Modest capex declines For personal use only CAPEX of Top 10 Oil Majors ($B) Aggregate Totals 350 300 250 200 150 100 50 2011 2012 2013 2014 2015E 2016E PetroBras PetroChina ExxonMobil Chevron Shell China Petro & Chem Co TOTAL SA BP Statoil CNOOC Source: UBS Oil & Gas Capex Ou
Slide 45: NOC Capital Expenditure
NOC Capital Expenditure Modest capex declines For personal use only National Oil Companies Top 14 (excl Saudi Aramco) 250 Global CAPEX Spend (US $B 200 150 100 50 Source: Macquarie Capital Markets 45
Slide 46: 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
Slide 47: Disclaimer
Disclaimer For personal use only The information in this presentation about the WorleyParsons Group and its activities is current as at 25 February 2015 and should be read in conjunction with the Company’s Appendix 4D and Interim Financial Report for the half year ended 31 December 2014. It is in su