Worley Limited (WOR) Earnings Call Transcript & Summary

Good morning, and thank you for standing by. Welcome to the Worley Full Year 2026 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Chief Executive Officer, Chris Ashton.

Thank you, and welcome, everyone, for joining Worley's full year results presentation for the 2026 financial year. As usual, I draw your attention to the disclaimer on Slide 2. I'd first like to acknowledge the Gadigal people of the Eora nation, the traditional custodians of the land from which I'm calling today, and I pay my respects to their elders past and present and to the emerging leaders. Turning to Slide 3. I'll begin with business performance. Justine will then take you through the financial results, and I'll return to cover our strategy and outlook. It's fair to say FY '26 was a story of 2 halves with resilient results and strong momentum in the first half, followed by a more challenging second half. The main factor impacting our growth in this financial year was the conflict in the Middle East, together with foreign currency translation impact, we weren't able to achieve our FY '26 outlook expectations. We've also navigated softer conditions in some markets, but elsewhere, activity remained strong, particularly in the Americas, and we stayed close to our customers, secured significant contract wins and maintained a healthy pipeline supported by strong demand drivers. During the year, we repositioned resources toward areas of stronger demand and reset the cost base to support future growth. And at our Investor Day in May, we outlined our growth strategy, focusing on winning more full project delivery work and leveraging our expertise in complex critical infrastructure to expand into adjacent markets, and we're already seeing good traction. This year saw significant progress in delivering Venture Global CP2 LNG project in the U.S. and both Phase 1 and Phase 2 reached full and final investment decision. And more recently, we were named as the preferred bidder on Uniper's Connha's Quay Low Carbon Power project in the U.K. There is strong evidence of momentum in major EPC and EPCM contract wins, reinforcing our confidence in medium-term growth. Turning to Slide 4. I'm now going to take you through the headline numbers, where aggregated revenue was $12 billion, broadly in line with FY '25 and on a constant currency basis, revenue of $12.3 billion, showing a growth of 2.3%. Growth was 5.4% in the first half and softer activities with segments -- within segments of chemicals market and the Middle East conflict impacted the second half. Underlying EBITA was $734 million, reflecting these factors along with the impact of FX translation. On a constant currency basis, underlying EBITA was $773 million. We remain margin resilient and cash generation remains strong with normalized cash conversion at 93.6%, well within our target range, reflecting continued operating discipline. Supporting future performance, cost initiatives and business restructuring set our cost base, and we expect improved earnings momentum into FY '27. Our outlook expectation for FY '27 is mid- to high single-digit growth in revenue and underlying EBITA. And I'll talk more about this, how we get to this through the group outlook. Looking further ahead, the opportunity remains compelling. Worley is positioned at the center of the long-term need for secure and affordable energy, chemicals and resources with the customer relationships, with scale and the expertise to deliver more full project delivery work and expand into higher growth markets, and that is how we deliver our FY '30 ambition. Turning to Slide 5. Our highest priority has always been on keeping our people safe, and we had another year of strong safety performance, notable given the nature of some of the environments in which we operate, including, in particular, the conflict in the Middle East this year. Our total recordable frequency rate has improved to 0.07 and our serious case frequency rate improved to 0.006. That performance matters. It reflects the discipline and care of our teams around the world. I cannot overstate how deeply proud the Board, my leadership team and I are of our people in the Middle East. Their professionalism and dedication to supporting our customers while continuing to deliver through periods of intense military activity and heightened security risk has been nothing short of extraordinary. Our leaders and our R3 teams have worked tirelessly to support our people and our customers throughout this period. And I'm pleased that our workforce of more than 4,000 people along with their families within the region remain safe, and we'll continue to focus on keeping our people safe and supporting our customers. On ESG performance, we strengthened modern slavery reporting and have reduced emissions by 76% from our 2020 base. We published our Australian mandatory sustainability reporting disclosures in our annual report in line with the new reporting and disclosure requirements. Turning to Slide 6. As I mentioned, FY '26 was challenging, but the drivers of growth remain firmly in place. Strong demand fundamentals continue to support activity across the broader portfolio, particularly in the Americas, offsetting softer operating conditions in some markets. In the second half of the year, the Middle East conflict led to project delays and resulted in lower volumes impacting growth. And we provided the market with updates on the impact to our business as it became known. The conflict has continued for longer than anyone anticipated and the timing of recovery remains uncertain. Throughout this period, we stayed close to our customers and supported them where we can. This has strengthened those relationships and positions us well as the deferred work begins to return, which is what we're seeing. As noted, FX translation also weighed on the reported results. Turning to Slide 7. What differentiates Worley is the breadth of capabilities and global scale we bring to customers around the world. We have a capital-light business model, long-standing customer relationships and diversified earnings across geographic regions and across energy, chemicals and resources. Our capability and expertise across the full project life cycle continue to underpin our growth strategy. Professional services remain at our core, with construction, fabrication and procurement growing as customers engage us across more of their capital programs, and that shift is deliberate and supports our FY '30 growth ambition. Turning to Slide 8. Our leading indicators continue to show strong demand and support confidence in our FY '30 ambition. The fact that sales pipeline increased 24% with the greatest momentum coming from the Americas and EMEA. The pipeline of opportunities has grown as Worley builds its portfolio in reimbursable EPC and EPCM work scopes and future-facing growth markets. We're strengthening early-stage consulting position to capture opportunities in full project delivery. Bookings for the year were $15.5 billion, supported by wins predominantly across energy and resources. 44% of these wins have been sole sourced, reinforcing the confidence customers have in Worley. As I've said, both Phase 1 and Phase 2 of CP2 were booked during the course of the financial year. Note that we already provided engineering procurement and construction services planning under a reimbursable contract, so only the remaining scope of work moved into backlog. Backlog increased 9% over the 12 months to $13.8 billion with over 62% of that expected to be delivered in the next 12 months. This is down on $16.7 billion reported at the half year due to major project work being delivered in the second half and timing of new awards. As we noted at Investor Day in May, we removed ExxonMobil's Baytown Blue project, which remains on course. FX translation also had a bearing on backlog, which would have been $15 billion on a constant currency basis. The focus on FY '27 is clear: continue to deliver backlog, driving revenue growth and converting near-term pipeline opportunities into wins. Moving on to Slide 9. Our strategy to win more full project delivery scope is supporting our confidence in achieving our FY '30 growth ambition. We're focused on identifying opportunities in reimbursable EPC, EPCM work scopes within our pipeline and more than 45% of our current backlog consists of active EPC, EPCM projects. Our strategy is showing early success. You'll have seen the strategic project wins we've announced in the market over the course of the year. These wins span both our existing core markets and targeted future-facing growth markets and reflect both established relationships and new customer relationships. We're working closely with leading global customers in high-demand growth markets. In FY '26, we booked more than $10 billion of wins in our identified growth markets. Since year-end, we've continued that momentum, securing contract wins across power, copper, integrated gas and other energy projects. And we've highlighted those project wins, which form part of our major projects and programs on this slide. Energy remains our largest sector with strong underlying demand drivers. Aggregated revenue increased 8% to $6.4 billion, supported by major EPC projects moving into execution. Integrated gas and LNG in particular, remain a key driver of growth and project timing is influenced by regulatory approvals. The Middle East remains an important market for Worley. Our long-standing customer relationships across the region have led customers to engage us on damage assessments, reconstruction planning and advice to support resilient rebuilding when conditions allow. Power infrastructure is becoming increasingly important, supported by rising electricity demand from data centers and investment across gas-fired generation, renewables and nuclear, representing a strong growth opportunity for Worley. Moving on to Slide 12. Uniper's Connah's Quay project in the U.K. reflects a major opportunity for us in power infrastructure. The planned development of the project combines growing electricity demand, energy security and emissions reduction and is representative of the growth and opportunities we're seeing in our pipeline. Moving on to chemicals on Slide 13. Chemicals remains an important long-term market, although conditions were challenging in '26 and are likely to remain so in '27. Aggregated revenue declined 22% to $2.4 billion, reflecting project cancellations such as Shell's RED II Green project and lower activity in some regions, particularly where the market is still working through oversupply. And at the same time, we continue to see investment in refining and asset optimization, including debottlenecking, product slate changes, decarbonization and life extension projects. Petrochemical rationalization and low carbon fuels represent opportunities with project progression to final investment decision, the important indicator over the next 12 months. Moving to Slide 14. Heidelberg's Padeswood project highlights the continued investment we're seeing in industrial scale decarbonization. This project demonstrates how our EPCM capability helps customers reduce emissions from existing operations while developing critical carbon capture infrastructure. Moving on to resources. Resources has been our fastest-growing sector over the last 4 years. In FY '26, aggregated revenue increased 6% to $3.3 billion. Growth this year was driven by increased activity across mine, fertilizers, copper and battery materials, while with continued investment in iron ore. We're also seeing an uplift in demand across the aluminum value chain. Copper is critical. Electrification, data centers and grid investment continue to support long-term demand growth. Both brownfield expansions and greenfield developments will be needed to close the supply gap. We've won contracts with 16 customers for copper projects this financial year alone. Fertilizers and fertilizer projects are supported by population growth and food security, although the Middle East conflict is affecting sulfur supply and phosphate projects in North Africa, while potash projects continue to progress at pace. Battery materials are showing signs of renewed activity. We're seeing a stronger pipeline and broader value chain exposure from mineral extraction through to active materials and recycling. BHP's Jansen potash project reflects the attractive long-term fundamentals supporting fertilizer demand and global food security. The project demonstrates how we bring together fabrication, modularization and construction services to support delivery of one of the world's largest potash developments. I'm now going to hand over to Justine to talk you through the financial results in more detail.

Thanks, Chris, and good morning, everyone. Before I take you through the detail, I want to highlight 3 key points that provide context for our FY '26 performance and how we're positioned moving forward. First, activity levels across much of the business remained strong during the year. And while earnings were impacted by disruption in the Middle East and softer activity in parts of the chemicals market, we continue to secure significant contract wins supporting bookings and backlog growth, which provides line of sight to future earnings. Second, we've taken targeted actions to simplify the business, reduce structural costs and improve efficiency. These actions help strengthen the business today while also creating capacity to selectively reinvest in priority growth opportunities. And third, we've maintained a strong financial position throughout the year. Our balance sheet and cash generation provide the flexibility to invest in our ambition, navigate near-term uncertainty and continue returning capital to shareholders. With that context, let me take you through the results in more detail and turning to Slide 18. Aggregated revenue for the 2026 financial year was $12 billion, broadly in line with FY '25. On a constant currency basis, aggregated revenue was $12.3 billion. Underlying EBITA was $734 million. The adverse impact of the Middle East conflict on earnings was $58 million, in line with what we had communicated in our 25th of June update. And as Chris noted, the foreign exchange translation impact had a bearing on the result. EBITA margin on an ex procurement basis was 9% and on a constant currency basis, in line with FY '25 and remained within our outlook range. One-off costs related to restructuring activities for the full year were $120 million. Consistent with the half year, these have been excluded from underlying EBITA. You can see the impact of these costs on our statutory NPATA. Savings from our cost management program launched this time last year have exceeded our initial target. These initiatives result in a leaner cost base to support growth, AI and digital deployment and future earnings performance as well as partially offsetting inflationary pressures. Our normalized cash conversion remains strong at 93.6%, well within our target range of 85% to 95%, and it reflects our continued focus on cash and operating discipline. We remain in a strong financial position to support growth and return capital to shareholders. The Worley Board has determined to pay a final dividend of $0.25 per share unfranked. We returned $359 million to our shareholders as we completed the $500 million on-market share buyback in the full year 2026. And in May, we commenced a new $300 million buyback program. Turning to Slide 19. I'd now like to just talk through a number of -- some of the key drivers. While the aggregated revenue was $12 billion, if we look at this on a constant currency basis, the result was stronger at $12.3 billion, reflecting growth of 2.3%. The growth was less than what we had anticipated at the beginning of the year and highlights the headwinds we've faced as our results have been translated to Australian dollars for presentation reporting. Underlying EBITA declined from $823 million to $734 million. On a constant currency basis, the result was $773 million. Headwinds impacting the result were the extended conflict in the Middle East, which resulted in disruption to existing projects, although the greater impact was the delayed commencement of new awards. We also continue to experience a slower chemicals market. As we expand the scope of our work along the project value chain, there is a mix of margins within that expanded service offering. Major project activity phasing moved towards greater construction, fabrication and procurement. This supported revenue growth and attracted a different margin profile. Our EBITA margin, excluding procurement, was within our target range. And our underlying EBITA margin, including procurement was 6.3% on a constant currency basis. Turning to Slide 20 and the translation impact. Approximately 93% of Worley's revenue is generated outside Australia. And as you can see in the chart, movements in foreign exchange was a larger translation headwind in FY '26 than we have seen in recent years. During the year, the Australian dollar strengthened against multiple currencies, particularly in the second half, and this has had a direct translation impact on our Australian dollar presentation of results. If FY '25 average rates had applied, our FY '26 EBITA would have been $39 million higher. Relative to the FX rates assumed in our FY '26 outlook, the translation impact was greater and reduced our FY '26 EBITA by approximately $50 million against our outlook expectations. We've provided our results on a constant currency basis where relevant to provide a comparative view of underlying business performance. Worley is exploring a change to its reporting currency from Australian dollars to U.S. dollars. The group currently has a substantial economic presence outside Australia and the current and expected foreign currency earnings mix is an important consideration to evaluate a change in reporting currency, which would reduce translation volatility. Consolidated financial results for the year ending 30 June 2027 will continue to be reported in Australian dollars, following which results for the half and the full year to 30 June 2028 would potentially be reported in U.S. dollars. We will continue to keep the market updated on this potential change. If I turn now to Slide 21. During the year, we continued our efforts towards reshaping the business to strengthen future performance. We incurred $120 million of one-off costs relating to transformation and business restructuring. These costs predominantly relate to restructuring in Western Europe, where local labor protections resulted in higher severance and related costs. We incurred $82 million of these costs in the first half and $38 million in the second half. This was in line with our earlier guidance that we expected further costs to be incurred in the second half, but these would be lower than those already incurred in half 1. The cost-out program exceeded the initial target of $100 million, and we've achieved $132 million of savings. These actions are focused on resetting the cost base, aligning resources to areas of higher demand, reducing complexity and improving scalability. The efforts of the team to take these important steps to strengthen our cost discipline and improve our earnings quality benefit shareholders in this financial year as we see this come through in lower global support costs. And in addition, these savings in FY '27 will partially offset inflationary pressures and be used to reinvest in strategic hires, differentiated delivery platforms and investment in digital tools. As we set out at our Investor Day in May, we are targeting approximately $70 million of investment over 2 years. These actions support a more efficient and scalable operating model, and they support stronger future earnings performance. If I turn now to Slide 22, I'd finally like to take you through our capital management position. Our capital framework remains disciplined, and it's designed to support both growth and returns to shareholders. We continue to invest in the business while prudently managing debt and maintaining balance sheet flexibility. Our balance sheet position is supported by an investment-grade credit rating of BBB with a stable outlook. Normalized cash conversion was 93.6%, well within our target range, and our days sales outstanding improved to 44.3 days and remains well controlled and comfortably within our target. Our balance sheet remains strong with leverage at 1.8x and remains below our target of 2x. Total liquidity was $2.1 billion at 30 June 2026. The Board's decision to commence a further $300 million buyback program reflects confidence in our business. In May, we refinanced the euro medium-term note with a new 5-year Australian dollar medium-term note for $375 million. And together with the new 364-day liquidity facility and part utilization of the syndicated facility revolver, we continue to maintain a diversified debt portfolio with a balance between loan markets and global debt capital markets. The weighted average cost of debt was 4.4% at 30 June '26 and although this will increase following the refinancing of the euro medium-term note at current market interest rates. Overall, our disciplined approach to capital management remains a key differentiator and supports long-term value creation. In summary, a challenging earnings performance for the full year, but activity levels across much of the business remain strong. We have delivered on the cost management program and created the platform to deliver our ambition, and we have continued our strong focus on cash conversion and balance sheet strength, which positions us well to support growth and returns to our shareholders. I'll hand back to Chris to take you through our strategy and outlook ahead.

Thanks, Justine. I'll now take you through the strategy and outlook, including our priorities to achieve the FY '30 growth ambition. But first, I want to remind you of the growth trend over time. The charts on Slide 24 are a reminder that growth is rarely linear. The growth of the long-term trajectory remains positive. And while FY '26 reflected a more challenging operating environment, it doesn't change the solid fundamentals of the business. Over several years, Worley has delivered growth in revenue, EBITA, EPS and backlog supported by a diversified portfolio across sectors, geographies and services. And that diversification is important. It gives us resilience through cycles and allows us to shift capacity toward areas of greater customer demand as markets shift. Moving on to Slide 25. Our FY '30 growth ambition is underpinned by 4 drivers of earnings growth. First, the current market growth. We continue to benefit from tailwinds in our core end markets while also responding to the broader demand for energy, chemicals and resources as affordability and security become a greater global focus. Second, AI-enabled full project delivery. We're increasing the scale of the projects we deliver by working with customers across the full project life cycle and using technology to improve execution, productivity and scalability. Third, future-facing growth markets. We're scaling in growth markets like power and data centers with structural demand from electrification, energy transition, resource demand, AI and digital infrastructure and energy security. And finally, scale benefits. AI, GID and cost discipline support margin resilience as we grow. Our ambition is to deliver medium-term double-digit underlying EBITA CAGR by FY '30. Moving on to Slide 26. In our current markets, we're focused on converting pipeline into backlog, growing revenue and winning a greater share of customer investment. Framework agreements and deep relationships with our customers will support that growth. In AI-enabled full project delivery, our major projects and programs model is operating effectively. We're expanding reimbursable EPC and EPCM work, increasing GID utilization and embedding AI and digital tools to create a more scalable delivery model. In the future-facing growth markets, we're building on significant wins in gas and LNG, energy transition materials, power and data centers while maintaining discipline in the market and the contracts we select. On scale benefits, we'll maintain cost discipline, reinvest selectively and increase the use of GID where it improves efficiency. Moving to Slide 27. Demand across our core markets is underpinned by favorable medium- and long-term fundamentals, including the need for secure and affordable energy, critical resources as well as investment in export supply chain and critical infrastructure. This year, we expect to deliver mid- to high single-digit growth in underlying EBITA, and this will be more heavily weighted to half 2 than historical norms. We also expect mid- to high single-digit growth in aggregated revenue with revenue phasing across the half year periods broadly even. Disruption and uncertainty in the Middle East persists, and we're seeing second order supply chain impact, particularly as it relates to the supply of sulfur for fertilizer projects within North Africa. Our customers in the Middle East are turning to us for damage assessments, reconstruction planning and early-stage new projects designed to help them navigate export constraints and rebuild resilience. And while the timing and scale of associated opportunities remains difficult to predict, our outlook anticipates work volumes in the Middle East to lift in half 2. Activity across the broader business continues to benefit from strong demand in key markets, and we're seeing tailwinds in our largest market, North America. A growing portfolio of major projects within the pipeline supports our growth outlook. These are projects where Worley already has an established position through earlier phases of work. As those projects progress, we expect more of that work to move into execution. So just moving on to Slide 28. That concludes the formal part of the presentation. We appreciate your time, and Justine and I are now happy to take your questions.

[Operator Instructions] And our first question comes from the line of Niraj Shah from Goldman Sachs.

Just a couple for me. Firstly, in terms of the guidance, the mid- to high single-digit EBITA growth, is there a currency headwind embedded in that? Or is that a constant currency expectation?

Niraj, look, the way we've looked at the outlook is we've used a weighted average forward currencies to determine the exchange rate across our portfolio and currency mix. As we move through the year, of course, we will look at our performance, and we'll provide a view of that on a like-for-like basis to the prior year. But as you could appreciate, we operate across around 30 different currencies, and they will have a different mix around the earnings, and that will change from period to period, but is based on an assumption looking at that forward rate at a point in time.

Understood. And in terms of the second half, stronger-than-normal second half weighting of that guidance, should we expect earnings or EBITA in the first half to grow given that skew?

You can expect the earnings -- when we talk about the first, second half, you would have traditionally seen a trend for Worley that probably put our earnings at around probably 45% to 55% type of weighting between the first and second half, if we looked over the last number of years. We can certainly expect that earnings skew to be greater than that into the second half for FY '27.

Yes. Look, sorry, Niraj, I'll just add to that. So if you look at like the first half of the financial year, it's always impacted by the Northern Hemisphere summer period. So you've always got that -- so if you're looking at the first 6 months of the calendar year against the second -- so the second half of FY '26 against the first half of '27, you'll all see a difference because the first half of the financial year is just impacted by Northern Hemisphere summer vacations, people taking time off. It's always different.

Understood. And then last one for me. Just how are you thinking about potential restructuring costs into fiscal '27 or below the line items in general?

Niraj, we don't have a plan for further restructuring as we move into FY '27. You can appreciate that we will continue to take a very disciplined approach to how we allocate resources and how we manage our cost base. But certainly, at this point in time, we don't have a plan for restructuring into FY '27. In terms of how we treat those costs, we have been consistent with that over a number of periods, and our view around that has not changed.

We will now take our next question and our next question comes from the line of Ramoun Lazar of Jefferies. [Operator Instructions]

Chris and Justine, just a couple for me. Just wondering if you could maybe take us through the backlog, particularly that June quarter period. It seems like a pretty material step down from the March period that you provided at the Investor Day through to June. Just what's driving that? And anything you can provide us into the first couple of months of this year would be helpful.

Yes. Look, you have seen a step down in that backlog if we looked at it from the half. And the real key drivers around that is, obviously, we've executed the work that was in the backlog, and that's shown that come down from what we had at the half year. We'd also -- which we had advised certainly in May is we removed the Baytown Blue from that backlog number as well coming through. And then, of course, you do see a currency translation impact sitting in that backlog as well. But really, the main impact is the burn profile into that second half. As Chris really talked about, we've seen a number of strategic wins coming through in FY '26 and certainly, based on the conversations that we are having with customers today have some optimism around our backlog moving forward, particularly if you see the pipeline and the bookings growth that we're showing.

Right. And have you seen that in the first couple of months of '27, any of that sort of backlog -- move into the backlog? Or is there still delays in realizing some of those project wins?

We've shown and you might -- we can point to one of the sets of material in the presentation where we have highlighted a number of the strategic wins so far. A number of those, and Chris talked to Connah's Quay for Uniper. That, of course, is not yet reflected in the backlog that we are showing. We have been -- we are the preferred contractor for that scope of work. There's a number of these that we have highlighted that you are not seeing in that backlog number because, of course, it represents a point in time, which is 30 June 2026.

Yes. I mean -- and to add that, if you look at the EPC for Connah's Quay, TC Energy, these are material awards that once they get FID, will make a significant contribution to the backlog, a material contribution to backlog. So it's just a timing thing rather than any fundamental shift. And as you can imagine, the awards as they move from studies or engineering into full delivery, it's never linear. We can't -- we can -- we're the -- I guess, the win of the customer. But the project -- the very large projects that we're working on, yes, show great prospect for coming into backlog within this financial year.

Okay. Got it. I've just got one very quick one. Maybe just -- are you making any assumptions around further Middle East impacts within your guidance?

So if we look at the Middle East and the way I think about it, you think of a band, above the upper part of the band would be all-out war. Below the lower part of the band, you've got piece, and we're operating in this kind of -- this space in the middle where it's neither all-out war nor complete piece. And what we found is our customers are kind of normalizing things and starting to get back to normal as normal can be. We're seeing deferred projects that were deferred, in the meanwhile start to come back on the table, and we're in discussions with them. So we're actually seeing for '27 growth in the Middle East. But like anything, you pick up the newspaper and the leader of the U.S. is saying one thing one day and then a few days later, something else. But currently, what we're seeing with the customers is a normalization of operations and investment. And again, the key indicator for me is those projects that were deferred at the beginning of the war or at the end of February are now back on the table and we're in discussion with them. So it gives me confidence, all things remaining as it is now that we'll see the growth that we're expecting -- we'll deliver the growth that we're expecting and projecting to have in '27.

I think -- the one thing I would add, Chris, is we certainly, through the work that we've done, we see that coming through in the second half of the year. We do recognize, as Chris said, the continued uncertainty in the Middle East that we've seen this year. So our assumption is that we see that come through in the second half.

We will now take our next question from the line of John Purtell from Macquarie.

Chris and Justine, just in terms of your '27 earnings growth drivers there, if you wouldn't mind just providing some further sort of color detail around what you see as the key growth drivers. Obviously, Justine, you've talked to the cost out. So presumably you're expecting some tangible benefit there. CP2 is obviously moving into full phase construction. And then North America, you mentioned, Chris, you're seeing sort of growth there. So if you wouldn't mind just pushing some of that out, that would be great.

John, look, you've absolutely pointed to a number of the key ones there. And maybe starting with as Chris said, the work and the conversations that we're having with the customers around the Middle East, one from the deferral of work from FY '26 into FY '27 and then some additional scope, which I'm sure Chris will talk to. As you noted and we've talked to the market previously with Venture Global, certainly, as part of CP2, the team is in that construction phase of that project, and there is very significant momentum there and scope of work that is due to be delivered through the course of FY '27 and then also into FY '28. You might have seen in the material and Chris mentioned very briefly, within our backlog, we do see about 62% of that backlog being delivered through the course of FY '27. But, Chris, maybe you want to mention a couple of things.

Yes. Look, if you look at -- obviously, we can talk about BG, but I think that's pretty well understood. We've got Phase 1 and 2 and then there's the Phase 2 expansion, which we expect that we will get FID in '27. We've got the Connah's Quay, which we are well into in terms of the early phase work that will get FID in '27. We got Heidelberg, we've talked about. We do -- look, we do have a recovery in the Middle East, John. Now the recovery in the Middle East -- and look, like I said, we're projecting growth overall year-on-year. The growth in the Middle East has been offset by a slowdown and deferral of investment in North Africa. That's just because the customer base can't get sulfur through the Hormuz Strait. They can't get sulfur at the volumes they need to produce the fertilizers, to sell the fertilizers and generate the free cash to invest. And so there's been a significant slowdown in that space, offset by what we think is solid growth in the Middle East. So there's growth in each of the regions. It's just -- some of it isn't necessarily obvious because of the North Africa offsetting the Middle East growth. America is going to show growth. I mean the Americas is showing sort of a rebound, really strong activity especially on the power side and the data side, and we look forward to making some announcement shortly. That will reflect some significant progress in the data center space. So I suggest that people watch out for that.

And our next question comes from the line of Rohan Sundram of MST Financial.

Chris and Justine, questions have been answered. So I'll just ask a question on the CP2 project, given it's still such a massive contributor. I was just curious, how much of a driver can it be towards that revenue guidance you've given and how are the margins performing versus expectations?

I'll answer the second part first, and that is the margin expectations have been met on that project. It's -- we're -- we had, in fact, the Project Director for the customer present to the Board yesterday morning. The project is going exceptionally well. The Project Director on the customer side spoke very highly about the team's performance. And commercially, it's delivering in line with the contractual expectations. And now I'll let Justine answer the other part. Yes.

Thanks, Chris. Rohan, I mean, we don't comment on individual projects within our profiles, but we know that certainly through conversations we've had that Venture Global, it is a -- it does have an impact -- it is a strong deliverer of revenue through the course of FY '27, given the phase of that project, but it does sit within the broader portfolio, as Chris said, of other major projects and global operation portfolio work that we do. But yes, it has a contribution to FY '27, which certainly gives us confidence as we look at that backlog and what is due to be delivered through the course of this year.

We will now take our next question from the line of Nicole Penny from Rimor Equity Research.

Just a quick two follow-up on backlog. It was spoken about. But just to confirm again that backlog has fallen in the second half relative to the first half, and you spoke to that. And of course, we would expect a decline in revenue profile in the following period. Just could you reconcile that again that positive revenue growth outlook for FY '27? And perhaps on the back of that, given backlog declined in this period, even with strong pipeline and bookings, is backlog still the number we should be monitoring for a read-through on future revenue? Or should we really be focused more on bookings and pipeline conversion instead? And just a second one, a follow-up on the Middle East that was spoken about. We are 6 months into the disruption there. And you've mentioned it's impacting business activity. But to your point that customers are seeing normalization, could you just give us clarity again on any impact and flow-through to medium-term energy projects outside of the Middle East, please?

Let me take the first question. And what I would say is -- and you're right to look to pipeline and bookings. As a really strong and key indicator of where we see that growth profile, not just in the next 12 months, but over the longer term when we think out over the next 2 to 3 years. The backlog, what we have to be really conscious of is when we represent this, we represent it at a point in time. It reflects the 30 June position that we -- sort of we take a cutoff. And so it doesn't necessarily reflect, as we said earlier, those strategic wins that we see coming through the portfolio. So I think you are right to look at bookings, to look at the momentum and strength of the bookings and the pipeline growth that we see as they look through to that aggregated revenue growth that we expect over the near and medium term. Chris, I'll let you comment on the Middle East.

Yes. Yes. Just want to just repeat again your question just to make sure I understand it.

The Middle East. I'm just asking, since you're saying that some of the customers are pointing to normalization, however, could you give us any clarity on the impact through to the medium term on energy projects outside of the Middle East since I suppose the Middle East has occurred, is there any change that's moved more outside of the Middle East on the back of that?

I think what we -- if we look at the -- I reflect on conversation with customers, while you're still seeing the Middle East operators, so the national oil companies and the national energy companies continue to invest, what you've got with the national energy companies is they're looking at where else the capital investment opportunities sit with not necessarily the risk premium that they would need or that would put on to invest in the Middle East. But if we look at the investment driver in the region, it's really coming from the national energy companies more than the international energy companies. So continue to see the NOCs invest and the IOCs, if they were looking to invest, they may still, but they're certainly looking at investing in different jurisdictions, different basins.

We will now move to our next question, and our next question comes from the line of Nathan Reilly from UBS.