RESOURCES engineering contractor WorleyParsons has been among the first to ring the alarm bells on the impact of the strong dollar on its earnings outlook, sending its share price tumbling.
Chairman Ron McNeilly warned shareholders at yesterday's annual meeting in Sydney that the dollar's strong appreciation was having a negative impact on the translation of foreign currency earnings.
He said if the dollar's current level was the average for the rest of the financial year, the expected impact on net profit for the full year would be $35 million to $40 million.
That hit would be on top of the ''modest'' profit reduction forecast in August. Last financial year the group posted a record profit of $390.5 million, up 13.6 per cent on the year before.
Shares in WorleyParsons fell $2.32, or 8 per cent, to $26.68 in response to the profit warning - one expected to be repeated by other companies with substantial overseas earnings bases during the annual meeting season. WorleyParsons was already feeling the heat from the slowdown and cancellation of energy and metals/minerals projects, after the mid-September 2008 start to the financial crisis.
''Our results continue to be impacted by the deferral of a number of projects, mainly in the minerals and metals sector and in the Canadian oil sands sector,'' Mr McNeilly said. ''Much of this impact has been offset with ongoing management of costs.''
Chief executive John Grill said a positive was that in 2009 it consolidated its position in the world's top-tier companies handling ''mega-projects'' valued at more than $US1 billion ($A1.08 billion).
WorleyParsons is involved in 60 such projects. Those during the year included the Kashagan oil project in the Caspian Sea, ExxonMobil's liquefied natural gas project in Papua New Guinea and Egypt's first nuclear power station.
