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Engineering group WorleyParsons will not pay a dividend for the first time in its listed history as it intensifies efforts to strengthen its balance sheet in the face of falling earnings and challenging market conditions.



WorleyParsons decided to axe its dividend and unveiled plans for another $180 million in annual cost savings in response to a 78 per cent slump in half-year profit.

Net profit for the period was $23.1m, down from $104.3m a year ago, with the drop exacerbated by one-offs including redundancy costs and onerous office leases. Excluding those one-offs, underlying net profit fell 29 per cent to $73.9m.

WorleyParsons shares have fallen to their lowest levels in a decade in recent weeks as it tries to cope with the sharp downturn in spending in the oil and gas and mining industries.

“The decision by the board not to pay a dividend shows that they are very considered in terms of ensuring that the business has a good solid financial position going through a period like this,” WorleyParsons chief executive Andrew Wood told The Australian.

Mr Wood said that while the board was mindful of the significance of dividends to its investors, the company’s priorities were on strengthening its balance sheet, reducing costs and improving customer value. A lack of available franking credits had also supported the decision to axe the payout.

“I think it was a very prudent decision by the board,” he said.