23 April 2014
WorleyParsons, the Australian professional services giant, is to spend US$33m on reorganising its corporate structure this year. Andrew Wood, the firm’s chief executive, said the move would simplify the business, reduce overheads and "align the business to market conditions".
The decision to restructure was the result of an internal review begun last year. The main change will be the formation of three business lines: services, major projects and a unit called "Improve" that will be responsible for asset-management and securing new business.
The three lines cover the company’s work in the energy, infrastructure, minerals and chemicals sectors. Previously, the company had been organised along geographical and sectoral lines.
The company issued a profit warning in November, after which its share price fell 30% to $15.72 in less than a week and a shareholder class action was launched.
In the six months to December, net profit fell 28% to US$105m, and the firm cut its interim dividend to 34 cents a share from 41.5 cents in the previous year. Its full-year turnover was US$8.1bn.
WorleyParsons’ senior management team. Andrew Wood is seated on the right (source: WorleyParsons)
Worley’s declining profitability has been largely caused by a global decline in the value of raw materials, the extraction of which has been the foundation of Australia’s long economic boom.
Like many companies providing services and equipment to the mining industry, Worley has shed thousands of workers in the past year, and is looking for further reductions in costs.
After making the announcement, Wood told reporters that the organisational change would be accompanied by a cultural one.
"We believe we have a unique culture that has helped grow this from a very, very small business to a large one in a relatively short period of time," he said. "We believe that in the past few years there has not been as intense a focus as we normally expect from our business on customers, so we are working through what we need to do to get that really high level of customer care back into the culture."
No figure for job losses were given, but it is understood that corporate rather than operational roles will go. Wood said he would release more information on this when the firm reported its results in August.
Worley’s share price rose 7% after the announced restructuring.
