Worley has revised its FY26 underlying EBITA impact from the Middle East conflict to up to $60 million, doubling its previous estimate, while also warning of a $50 million hit from foreign currency translation due to a stronger Australian dollar.
- FY26 EBITA impact from Middle East conflict raised to $60 million
- No project cancellations but delays in new project awards persist
- Foreign currency translation effect to reduce reported EBITA by $50 million
- Uncertainty remains despite diplomatic progress in the Middle East
- Customers continue to postpone project commencements amid geopolitical risks
Middle East Conflict Deepens FY26 Earnings Pressure
Worley Limited (ASX:WOR) has doubled its estimate of the FY26 underlying EBITA impact caused by the ongoing Middle East conflict, now expecting a hit of up to $60 million. This marks a significant revision from the $30 to $40 million range flagged just two months ago, underscoring the persistent disruption to its operations in the region and its global project pipeline.
Despite diplomatic efforts, including a recent memorandum of understanding aimed at ending hostilities and reopening the Strait of Hormuz, uncertainty continues to weigh heavily on project progress. Worley reports no cancellations so far, but customers remain cautious, deferring the commencement and award of new contracts. This cautious stance is delaying revenue recognition and weighing on profitability.
Currency Headwinds Compound Earnings Challenges
Adding to the operational challenges, Worley anticipates a $50 million negative impact on its FY26 reported underlying EBITA from foreign currency translation effects. The Australian dollar has strengthened in the second half of the financial year, reducing the value of overseas earnings when converted back to Australian dollars. As a global engineering and consulting firm with revenues denominated in multiple currencies, this currency movement is a material headwind for the company’s reported results.
Project Delays Persist Amid Geopolitical Risks
The company’s update reiterates that while no projects have been cancelled, the Middle East conflict continues to disrupt timelines. Customers’ hesitancy to proceed with new awards is a direct consequence of the ongoing geopolitical instability, which remains unresolved despite recent diplomatic gestures. This ongoing delay in project execution clouds the near-term outlook for Worley’s Middle East operations and related services provided from offices outside the region.
Worley’s earlier warnings in April highlighted the initial EBITA impact from the conflict, but the escalation in the estimate reflects a more prolonged and uncertain disruption than initially anticipated. The company’s exposure to foreign currency fluctuations further complicates FY26 earnings visibility, with the Australian dollar’s appreciation eroding reported profits.
Navigating Uncertainty Amid Strategic Growth Plans
Worley’s strategic ambitions for medium-term growth remain under pressure from these external shocks. The company recently outlined a growth strategy through FY30 focused on expanding project delivery capabilities and investing in AI-enabled services, but near-term earnings will likely be constrained by geopolitical and currency challenges. The market will be watching closely for how these headwinds evolve and whether resolution in the Middle East can unlock delayed project awards.
Bottom Line?
Worley’s FY26 earnings face a double squeeze from prolonged Middle East conflict disruptions and a stronger Australian dollar, raising questions about near-term recovery timing.
Questions in the middle?
- How will ongoing Middle East instability influence Worley’s project pipeline beyond FY26?
- To what extent could further currency volatility affect Worley’s reported earnings?
- Will diplomatic progress translate into accelerated project awards and improved EBITA in FY27?