Worley in results focus with global rival Wood under pressure

Wood, Worley’s largest global engineering rival, so far has announced asset sales worth between $US150m (235.6m) and $US200m.

Worley, an $8bn engineering firm, could be in sharp focus for deal-makers next week when the group reports its half-year results, as its major global competitor comes under intense pressure.

Wood, Worley’s largest global engineering rival, so far has announced asset sales worth between $US150m (235.6m) and $US200m, but some industry experts wonder if it may now be prepared to part with major divisions as the loss-making company faces serious pain from too much debt.

Wood’s asset sales to date were announced last week as part of the outcome of a strategic review and a refinancing.

It has $US680m of net debt after it hit $US1.1bn last year and its market value is about £200m ($400m).

Most of it loans are due in 2026 and it is weighing refinancing options.

Wood said the independent review is continuing, so more asset sales could be announced.

Parts of Wood Group that would appeal to Worley are the divisions that carry out high-margin consulting work and units involved in engineering work linked to mining or LNG-related projects.

Worley is in strong shape, capitalising on the back of challenges related to its competitors, including Wood, which borrowed too much debt when it embarked on an acquisition of Amec Foster Wheeler for $US2.7bn in 2017.

As a result, it has cut costs and lost key staff, and therefore customers, weighing on its overall performance.

Since then, Wood has fended off takeover advances from Apollo and Sidara.

Around the time Sidara bid for Wood, with its $US1.9bn proposal eventually rejected, Sidara offloaded a 19 per cent stake in Worley, the company it had been keen on acquiring in 2016, for $1.4bn.

Its holding reached 26 per cent, but it was diluted after the company purchased the Energy, Chemicals and Resources division of Jacobs Engineering in a $4.6bn deal in 2019.

For the year to June, Worley reported a 719 per cent lift in net profit after tax of $303m as revenue increased 4 per cent.

Its debt is 1.5 times its earnings and its debt level, or gearing level, is 22 per cent.

Historically, Worley has been close to investment bank UBS.