Another Australian company has run into a rough patch. Sydney-based WorleyParsons has taken a beating from the downturn in the global oil business and a sluggish metals and minerals markets, declaring a nearly $55-million loss for its latest business year.
That compares with a $249-million profit, in 2014, for the engineering and construction management giant.
WorleyParsons is the second major construction industry company based in Australia to run into trouble recently. In May, Brisbane-based Cardno Ltd. said it expects to have to write down $154 million on the value of its U.S. and Ecuador businesses, citing the impact of changes in the oil-and-gas market, weather and an investigation of "questionable payments" by its Ecaudorian infrastructure subsidiary.
WorleyParsons' aggregated revenue held up better than its net income, falling by a more modest 1.8%, to $7.2 billion, in what company officials called an encouraging sign, as they push to bring in new business and diversify the company’s base. They say they are seeking opportunities in power, passenger-rail and port projects, among other areas.
A slowdown in the construction of new oil-and-gas projects has been a particular problem for the company, which derives just under three quarters of its revenue from its hydrocarbons unit.
As oil prices have plunged, the major energy companies have cut back on their capital spending for new projects, Chief Executive Andrew Wood noted in a press statement.
The company also has had to make concessions to some customers in order to keep their business, taking a further toll on the bottom line, the company indicated.
Most of the slowdown in activity is taking place in North America and across the Asia-Pacific region, including China and Australia.
WorleyParsons has responded to the slowdown with a sweeping restructuring of its business, cutting more than 4,000 jobs since June 2014, with the deterioration in the oil market in recent months requiring deeper cuts than first was planned.
The company now has 31,400 employees in 157 offices around the world.
WorleyParsons’ metals-and-minerals business also took a major hit last year, when Canada’s Kimi iron-ore project was scuttled without any advance warning, the company noted.
The sector remains “depressed,” with companies focusing on improvements to existing mines and process facilities, though medium and long-term prospects remain solid, the press release noted.
“We will continue to balance the long-term sustainability of the business with the need to align our operations to market conditions in the short term,” Wood said in a statement.