During financial year 2015, we unveiled our strategy to return the Company to growth. As the resources and energy sectors undergo significant transformation driven by prolonged low commodity prices, WorleyParsons continues to transform to respond and reposition the business for future success.

The five strategic themes, first introduced in financial year 2015, remain the platform for transformation of the business. 

 

Five strategic themes

Where we are heading

Today, the revenue of the business is concentrated in the hydrocarbons sector and the provision of engineering services. We are deploying traditional go–to–market strategies, payment models and service delivery methods. Our ambition is to transform the business by:

•  growing our exposure to selected attractive markets while defending our position in hydrocarbons

•  offering a range of solutions that increase our market share

•  having a differentiated digital capability

•  deploying our global capabilities, including increased use of our Global Delivery Centers. 

In addition, we will have evolved our go–to–market strategies to more solution based selling with commercial models more focused on the value delivered. 

Enhancing our exposure to growth

The current priorities for financial year 2017 are to defend and strengthen our leadership position in onshore conventional, offshore and heavy oil and oil sands. We see opportunities to expand into the attractive sub sectors of chemicals and new energy or renewables and the prospective geography of Saudi Arabia, across all sectors. A key focus will be the development of our digital capability across all service offerings.

 

In the near term, we see opportunities in the power sector, supporting investments aligned to China’s One Belt One Road regional development plan and industrial water. 

Reducing our costs and strengthening the balance sheet

In February 2016, we announced targets to reduce our internal costs by $300 million, with initiatives to deliver the first $120 million in annualized benefits already in place. During financial year 2016 we exceeded our target of cost reductions and reduced our annualized overhead costs by $200 million.

We identified initiatives to generate the further $150 million in annualized benefits from the current baseline through a combination of cost reduction and revenue improvement initiatives. A structured program is in place with actions underway in a wide range of areas across the business including: restructuring our support functions and general management, improving our resource utilization, increasing utilization of our GDC, assessing remuneration against local markets and adjusting where appropriate, rationalizing office space utilization, exiting unprofitable or non-strategic locations, aggressive management of our spend with third parties, review of underperforming projects to improve margins and a restructure of the information technology platform and support organization.

 We restructured business development into a global sales and marketing group with an acute focus on leveraging our global scale and capability more effectively with a more aggressive pursuit in our current markets and the growth markets of tomorrow. The combination of structure, focus and reduced costs is expected to increase our market share.

We also announced our commitment to strengthen the balance sheet by targeting an improvement in cash position by $300 million. Through a focused short term effort across the Group, we have reduced our net debt by $115 million and reduced our day sales outstanding to 78 days. By implementing a number of system and process changes into the business, we expect to continue our performance improvement towards industry average of 65 days.