Former Halliburton subsidiary KBR’s 4th quarter profits up 65%
Associated Press
Published: Tuesday February 26, 2008
HOUSTON (AP) — Former Halliburton subsidiary KBR Inc. said Tuesday fourth-quarter profit rose 65 percent, lifted by contributions from natural-gas projects, work in Iraq and a tax benefit related to a 2006 asset sale.
The Houston-based military contractor and engineering and construction firm said profit for the October-December period was $71 million, or 42 cents a share, up from $43 million, or 28 cents a share, in the prior-year period.
The most-recent quarter included income from discontinued operations of $23 million, or 14 cents a share, due to tax benefits from the 2006 sale of its production services group.
The prior-year period included a loss from discontinued operations of $2 million, or 1 cent a share.
Wall Street expected KBR to earn 32 cents in the quarter, excluding one-time items.
Shares fell 45 cents to $33.60 at the open of trade.
Revenue for the final three months of 2007 amounted to $2.4 billion, topping the Wall Street forecast of $2.27 billion. Revenue in the year-ago quarter was $2.3 billion.
The company, which split from Halliburton last spring, said income from continuing operations amounted to $48 million, or 28 cents a share, versus comparable income of $45 million, or 30 cents a share, a year ago.
KBR said operating income in the fourth quarter of 2007 was partially offset by $22 million in charges from potentially disallowable costs incurred under U.S. government contracts in the Middle East in 2003.
Bill Utt, KBR’s chairman and chief executive, called 2007 a record year for profits.
“We continued to execute well on our current projects, ramped up work on several of our new awards and delivered solid operating results,” Utt said.
KBR is probably best known for providing food and shelter to U.S. troops in Iraq, thought Utt has said the company is likely to continue to do less work in Iraq as troop levels decrease.
Last month, the Army said it would revisit its decision to award three $5 billion contracts to KBR, DynCorp International Inc. and Fluor Corp. for services in Iraq.
The bundled contracts, which could be worth up to $150 billion if extended on a yearly basis over a 10-year span, have been on hold since July, after two private companies filed separate protests with the Government Accountability Office questioning the award. The Army has said it’s reevaluating new bids from the companies but has not specified when it would make an announcement.
For now, KBR continues to work under a previous, multibillion-dollar government contract.
Congressional Democrats and others have often criticized KBR’s war-generated profits because of its former association with Halliburton, which once was led by Vice President Dick Cheney. Halliburton is now focused solely on its lucrative oilfield services businesses.
KBR also is changing its focus a bit, striving to get back to its roots and land more industrial construction and other projects that contributed heavily to its bottom line 20 years ago.
KBR has announced several new contracts in the past year, both in the U.S. and overseas. They include a pact to manage construction of a chemicals and plastics production complex in Ras Tanura, Saudi Arabia - a plant that’s expected to be among the world’s largest petrochemical facilities.
It also will provide engineering services for an ammonia plant in Venezuela.
In the most-recent quarter, KBR said income at its government and infrastructure arm fell 40 percent from a year ago to $53 million, hurt by the $22 million in charges linked to the Middle East contract.
Its upstream arm had net income of $64 million, down from $67 million in the fourth quarter of 2006, though the company touted positive contributions from several ongoing projects in which KBR helps clients turn natural gas into commercial products.
Income at its services division rose to $23 million from $18 million a year ago.
For all of 2007, KBR said net income was $302 million, or $1.79 a share, up markedly from $168 million, or $1.20 a share, in 2006. Revenue was down slightly to $8.7 billion from $8.8 billion in 2006.
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