Worley Limited ((AU:WOR)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Worley Limited’s latest earnings call revealed a positive sentiment, underscored by strong financial performance and consistent growth in revenue and earnings. The company showcased a robust financial position and significant progress in sustainability and ESG initiatives. However, challenges persist due to geopolitical and macroeconomic factors, particularly affecting the chemical sector, alongside the cancellation of a major project.
Consistent Growth in Revenue and Earnings
Worley achieved its fourth consecutive year of growth, with aggregated revenue increasing by 4% and underlying EBITA growing by 10% year-on-year. The company exceeded its outlook expectations with an underlying EBITA margin of 9.2%, excluding procurement, surpassing the anticipated range of 8% to 8.5%.
Strong Financial Position and Share Buyback
Reflecting confidence in its financial position and growth outlook, Worley initiated an on-market share buyback in March, purchasing over 13 million shares for $168 million. The company’s cash conversion ratio was at the top end of the target range at 112.5%, and days sales outstanding improved to 52 days.
Sustainability and ESG Progress
A significant 60% of Worley’s revenue in FY ’25 was derived from sustainability-related work, up from 52% in ’24. The company achieved a 73% reduction in Scope 1 and 2 emissions from the 2020 base and maintained a leading ESG rating among its peers.
Strong Backlog and Bookings
The total value of bookings increased by 32% since June 30, 2024, reaching $17.1 billion, with a backlog of $16.9 billion, representing a 22% increase. Notable projects include the Venture Global’s CP2 LNG facility, highlighting the company’s strong project pipeline.
Geopolitical and Macroeconomic Challenges
Worley faces complexity and investment uncertainty due to geopolitical tensions, trade and tariff volatility, and other macroeconomic pressures, impacting customer investment decisions.
Challenges in the Chemical Sector
The chemical sector experienced lower levels of activity due to subdued market conditions, although long-term investments are expected to continue, indicating a potential recovery in the future.
Cancellation of NorthVolt Project
The cancellation of the $1.6 billion NorthVolt Sweden battery materials project earlier in the financial year affected backlog growth, posing a challenge to the company’s expansion plans.
Forward-Looking Guidance
Despite facing challenging geopolitical and macroeconomic conditions, Worley is poised for future growth with a 4% increase in aggregated revenue and a 10% growth in underlying EBITA for the fiscal year ending June 30, 2025. The company maintained a strong cash conversion ratio of 112.5% and declared a final unfranked dividend of $0.25 per share, signaling confidence in its ongoing performance.
In summary, Worley Limited’s earnings call reflected a positive outlook with strong financial performance, consistent growth, and significant progress in sustainability initiatives. Despite facing challenges in the chemical sector and geopolitical uncertainties, the company remains well-positioned for future growth, supported by a robust backlog and strategic investments.