Consulting and services firm WorleyParsons has announced a strategy to change its business model in the wake of slumping commodity markets.
The company told an investor day late last week that it would focus on five strategic themes going forward: to build a world class consulting business and “dominate the early project phases”; to be the global PMC provider of choice; to build a leading major ‘improve’ business; to be the smartest and most agile local service provider; and to use low-cost, local delivery centres to boost competitiveness.
The company’s share price has jumped almost 10% in the five days following the announcements, and analysts say it’s for good reason.
Deutsche Bank analyst Craig Wong-Pan reportedly told clients the strategy would differentiate the company from its peers, “but will take some time to execute and deliver benefits,” he was quoted by the AFR.
“We still expect the company to face challenging conditions and report weak earnings for at least the next 12 to 18 months,” he said, however.
Other analysts have suggested WorleyParsons’ new strategy is an indication that the oil price will stay low for longer than perhaps was expected.
After peaking at over $18.90 a share on the ASX in June 2014, WorleyParsons has seen its stock plummet to, at times, less than $9.00 in the last 12 months.
The collapse in most of the major commodities has contributed to that decline, which has seen the consultant and service business slash staff numbers around the world.
WorleyParsons closed at $11.00 a share on Tuesday.