It is an exciting time for WorleyParsons with the past twelve months being one of the most dynamic in recent years.
We believe the changes we have made as a company have us very well positioned as one of the most future-ready players at a very exciting time to be in the energy and resources industries.
The energy and resources industries continue to change and evolve as they undergo one of the biggest transitions of the past few decades. This transition brings with it some challenges but for WorleyParsons it brings many opportunities.
Last year we noted that we were at an inflexion point in the energy and resources markets. This year we can look backwards and say that we have moved past that inflexion point and are now seeing increased activity.
Demand and consumption of energy and resources continues to increase. Supply is tightening while existing fields and mines decline. Investment to meet that tightening demand into the near future has declined significantly in recent years. Our customers have now returned to financial health. We expect increased investment to follow.
While the demand for oil and gas continues to grow, this year is the year that fossil based power generation globally starts to decline as renewables move into the main stream, creating opportunities for our New Energy team.
We are looking at strong market fundamentals in the medium term, and WorleyParsons is positioned well for the future with the right know how and market strategy.
In FY2018, our aggregated revenue grew to $4,749.2 million (up 8.5% on prior corresponding period) and underlying net profit after tax (NPAT) was up 39.1% to $171.4 million – the highest in five years. Combined with our sustained cost reductions, this gives us strong operating leverage.
We delivered cash flow of $259.7 million, compared to $78.9 million in FY2017. Our backlog is increasing across all sectors and geographies. WorleyParsons operational and financial metrics are all sound.
Our unyielding stand on safety continues to deliver industry leading results. As outlined in the Chairman’s Report, we have maintained a stable safety performance across our group recording a TRCFR of 0.15 which remains one of the best performing ratings across the industry. In our pursuit of improvement, we have launched a review of our OneWay™ safety framework to incorporate a greater focus on human factors. Caring for the safety of our people, remains our primary emphasis.
This year we saw the successful commencement in operations for two of the largest projects in our Company’s history. The 1850km cross-continental Trans-Anatolian Natural Gas Pipeline (TANAP) celebrated its grand opening, and ExxonMobil’s Hebron offshore platform entered first production. We also continue to deliver on the Tengizchevroil project (TCO) which, once complete, will be one of the largest and most complex oil and gas developments of its kind in the world. Based on these successes, our backlog is increasing and we are moving onto new projects.
Our business is ready to capitalize on the growth we expect in the resources and energy industries. The focus is now on ensuring that the operational efficiencies gained in the past 24 months remain within the business. This will be achieved through our “Sustaining Performance” management program which focuses on a range of key business performance metrics. At the group level, key operating metrics such as staff utilization and backlog remain strong.
Strategy in action
WorleyParsons has a rich history of using acquisition opportunities to realize our strategic plans. The strategic acquisition of our UK Integrated Solutions business fast-tracked our strategy of building a world class global MMO capability and gave us a robust entry into the UK North Sea market. We also accelerated our entry into the European chemicals market through a smaller acquisition of the M+W Group’s chemicals engineering business in Germany.
Meeting the challenges ahead
Our challenge is to continue to adapt, change and deliver the solutions required in the expanding and dynamic energy and resources markets. While doing this we must leverage growth in market activity while ensuring key overhead areas remain right sized as business increases. We have put in place initiatives to ensure our overheads as a percentage of revenue will reduce as market activity increases.
Our customers tell us that the quality of our work is good and getting better. The best form of business development is to continue this trend. We believe our structure, aligned with the way our customers deliver projects, gives us the platform to lead the industry.
We must also continue our progress towards industry leading performance in working capital management. We now have most parts of the business in that position but we must do more.