WOR are a giant consulting engineering company who earn income...

WOR are a giant consulting engineering company who earn income by winning tenders/contracts. They design large projects, manage/oversee construction and commission the new oil refinery/offshore platform etc. Think of a house being built. WOR is the architect, not the builder. So winning new contracts is essential esp with 23,700 engineers and admin staff to pay.

Yet in yesterday's AGM 2 page address, CEO Wood only mentioned 'revenue' once! He said: "Turning now to outlook, in August we said that we expect trading conditions to remain challenging, leading to continued pressure on aggregated revenue. This certainly has been the cse to date and we are yet to see signs of recovery in trading conditions". Note he said there are not even "signs" of a recovery!

Reuters summary was:
Customers continue to face difficult market conditions
Ongoing weakness in commodity prices has led to further declines in capital expenditure across resources and energy sectors
Identified initiatives to generate a further $150 million in annualized savings throughout financial year 2017
Yet to see signs of recovery in trading conditions
Underlying earnings are expected to be more biased to second half than in previous years

There were no figures shown re 1HFY17 and no powerpoint presentation. Entire focus was on cutting costs to the bone across salaries, rents, admin overheads etc. CEO also spoke about 'in the medium' and 'long term'.

My take:
WOR main hope for revenue remains the hydrocarbon sector whilst not ignoring chemicals and renewables.
WOR have been awarded only ONE 'significant' contract this half i.e. 12/07/16.
Firm can't cut costs any further and winning new work is absolute key.
But the macro remains very weak with 'no signs of a recovery' in capex by clients.
IHFY17 will show another significant drop in aggregated revenue and unless some decent contracts are announced over the next 7 weeks then 2H17 will see a substantial drop in revenue further exacerbating WOR's difficult situation.

WOR can't make a country/company press the button a a 4 Billion contract re offshore oil field development (as an example). The oil price simply has to be a) high enough to justify the massive cost, b) strong sign that oil price will remain at high levels.
Even then big contracts will only be signed off when oil has been above the target level for several months as risks are so high.

WOR has cut costs massively. But so have their competitors. Going fwd margins will remain tight and new contracts will be keenly sought after by a world full of consulting engineers desperate for income.

Update: Last night oil price fell 2.4% to close below $50 at $49.30 (see Marketwatch)

disclosure: am short WOR