Tuesday August 12, 05:39 AM
UPDATE 2-WorleyParsons plans world's biggest solar plant
MELBOURNE, Aug 12 (Reuters) - Australian engineering services company WorleyParsons Ltd <WOR.AX> set out a plan to build a A$1 billion solar power plant, the world's biggest, within three years as it met market forecasts with a 53 percent jump in full-year profit.
Its shares rose 5 percent in a flat broader market as it expected stronger earnings in the year ahead, riding a boom in energy and mining projects.
As Australia looks to cap carbon emissions with targets for renewable energy and the introduction of carbon credits, WorleyParsons said it aimed to deliver 40 percent of Australia's renewable energy needs with 34 solar power plants by 2020.
It has launched a study, backed by major companies such as top miners BHP Billiton Ltd <BHP.AX> and Rio Tinto Plc (LSE: RIO.L - news) <RIO.AX>, to find potential sites for advanced solar thermal power plants in Australia, which it said has some of the highest intensity sunlight anywhere.
'I would be cautious about saying that this will work without their support. But with their support I'm quite confident that we're going to see solar power stations in Australia,' the head of WorleyParsons' EcoNomics arm, Peter Meurs, told reporters.
WorleyParsons, which competes against companies such as Foster Wheeler (NASDAQ: FWLT - news) <FWLT.O> and KBR <KBR.N>, has benefited from contracts for major mining and oil and gas projects, including work for ExxonMobil <XOM.N> in Russia.
The firm flagged more acquisitions after buying eight businesses last year for a total of A$247 million ($219 million), building its expertise in areas including deepwater oil and gas drilling.
'Our key markets and sectors continue to experience positive conditions and we are well positioned to respond to these opportunities,' WorleyParsons Chief Executive John Grill said in a statement.
'Subject to conditions remaining favourable we expect to achieve increased earnings in 2009.' Analysts expect the company to report 23 percent profit growth in 2009.
Net profit rose to A$343.9 million in the year to June, from A$224.8 million a year ago, in line with an average of A$342.6 million forecast by eight brokers.
Its earnings margins increased to 12 percent from 10 percent as it was able to charge higher prices for its services.
Revenue from WorleyParsons' hydrocarbons division jumped 40 percent in 2008 and made up more than three-quarters of the group's A$4.7 billion in sales.
The group took on more debt last year, taking its gearing up to 31 percent from 22 percent in terms of net debt to net debt plus equity. It said it remains well positioned to manage that debt, with 11.7 times cover for its interest expenses.
SOLAR POWER BOOM
WorleyParsons' solar power plan depends on its customers funding the new power plants, which would boost supplies during peak hours. It expects to complete its study by the end of this year. It would need commitments from customers by early next year to meet its goal of building the first 250 megawatt solar power plant in Australia, the biggest solar plant in the world, by 2011.
It would use technology that has worked successfully in California, based on parabolic mirror troughs that capture sunlight and convert it to heat to drive steam turbines, generating electricity. Total capacity from solar thermal plants in southern California is 354 megawatts, the company said.
The first plants would cost around A$1 billion each, and the company is assuming it would cost around 15 cents a kilowatt hour to produce power. Meurs said as newer technology became available, the plant cost was likely to fall.
Carbon credits would have to be priced at well over A$10 a tonne to make the solar power plants commercially viable and at A$50 a tonne would make solar power look relatively cheap.
By comparison in Europe, where carbon trading is active, credits have been trading at around 26 euros ($38.74) a tonne for December 2008 delivery.
($1=A$1.13, 0.67 euros)
(Editing by Anshuman Daga)
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