Worley axes 3000 as business shrinks

Resources contractor Worley’s job cuts follow oil industry disruptions volatility caused by COVID-19.

Resources contractor Worley has cut 3000 jobs after oil ructions and COVID-19 volatility sparked project cancellations and delays, with a new $465m debt facility added to boost liquidity.

The company reduced its headcount by 5 per cent to 56,000 staff at March 31 from 59,000 roles at January 31, reflecting falls in lower margin construction activities.

Salaries have been frozen and non-billable hiring halted with staff cuts, redeployment, early retirement, job sharing and furloughs all being considered to manage the downturn.

The global economic downturn had led to a contraction in Worley’s business from customers’ delays, deferrals and cancellations in field-based work, although other parts of the business had picked up at the same time. It had previously launched a cost review on March 30.

Chargeable hours dropped 2 per cent in March and Worley said it has postponed all non-essential capital expenditure, minimising discretionary spending.

It also added a $465m debt facility following a move on March 30 to extend $480m of working capital for 12 months to strengthen its liquidity position, which sat at $1.36bn at December 31.

Worley’s $4.6bn takeover of Jacobs last year eased its dependence on oil and gas by adding more chemicals exposure, although the contractor is still subject to big swings in the commodity cycle as energy companies urgently work to cut discretionary spending.

Some 20 per cent of Worley’s revenue is from exposure to customers’ upstream and midstream oil and gas spending, compared with 65 per cent four years ago, with 45 per cent from longer-term operating spending budgets from 10-15 per cent previously.

Just over a third of 37 per cent of income is from the less cyclical chemicals sector, from under 10 per cent.

Worley shares rose 2.3 per cent to $7.16.