Despite slight rise in oil and gas segment, KBR profits bobble

Source: KBR

KBR (KBR) announced today that first quarter 2010 net income attributable to KBR was $46 million, or $0.29 per diluted share, compared to net income attributable to KBR of $77 million, or $0.48 per diluted share, in the first quarter of 2009. 

Consolidated revenue in the first quarter of 2010 was $2.6 billion compared to $3.2 billion in the first quarter of 2009. Consolidated operating income was $99 million in the first quarter of 2010 compared to $144 million in the first quarter of 2009. 

Hydrocarbons business group revenue and job income in the first quarter of 2010 was $922 million and $103 million, up 4% and 5%, respectively, compared to the prior year first quarter. The Infrastructure, Government, and Power (IGP) business group revenue and job income was $1.3 billion and $86 million in the first quarter of 2010, down $549 million and $35 million, respectively, compared to the prior year first quarter, primarily related to reduced activity and absence of award fee recognition related to LogCAP III. Services job income in the first quarter of 2010 was $37 million, up $1 million compared to the first quarter of 2009, despite a $60 million decline in revenue over the same time period. 

“Although KBR’s earnings per share this quarter was disappointing and adversely impacted by timing to successfully conclude change orders on the close-out of two LNG projects, the absence of award fees, and the continued reduction in services on the LogCAP III project; the Hydrocarbons group, International Government and Defense, Power and Industrial, Services, and Ventures all reported increased job income compared to the first quarter of last year,” said Bill Utt, Chairman, President, and Chief Executive Officer of KBR. “Our expectations are that our performance in the remaining quarters in 2010 will improve and we remain comfortable with our previous outlook for 2010.” 

Hydrocarbons Business Group Results 

Gas Monetization job income was $53 million in the first quarter of 2010 compared to job income of $65 million in the first quarter of 2009. The decrease in job income was related to a first quarter 2009 gain of $16 million on the reversal of accruals on completed EPC projects, lower job income on the Skikda LNG, Escravos GTL, and Pearl GTL projects, and timing of change orders associated with the close-out of the Yemen and Tangguh LNG projects. Partially offsetting the decline in job income was increased work on the Gorgon LNG project.
Oil and Gas job income was $16 million in the first quarter of 2010 compared to job income of $18 million in the first quarter of 2009. The first quarter of 2009 included a net $7 million charge due to an unfavorable arbitration decision on the In Amenas project and several small one-time gains. The decrease in job income relates to several technical services projects that were either complete or near completion at the end of the first quarter 2010. 

Downstream job income was $22 million in the first quarter of 2010 compared to job income of $6 million in the first quarter of 2009. The increase in job income was primarily related to increased work on the Lobito refinery in Angola and several petrochemical projects. Also, job income in the first quarter of 2009 was impacted by additional costs related to the commissioning and start-up of the EBIC ammonia project.
Technology job income was $12 million in the first quarter of 2010 compared to job income of $9 million in the first quarter of 2009. 

Infrastructure, Government, and Power Business Group Results 

North America Government and Defense (NAGD) job income was $36 million in the first quarter of 2010 compared to job income of $74 million in the first quarter of 2009. The decrease in job income was primarily related to approximately $21 million in award fees in the first quarter of 2009 and no award fees in the first quarter of 2010, as well as lower overall volume on defense projects in Iraq and Afghanistan, primarily associated with the LogCAP III project. 

International Government and Defense (IGD) job income was $18 million in the first quarter of 2010 compared to job income of $14 million in the first quarter of 2009. The increase in job income was primarily related to increased contingency logistics, operations, and maintenance services for the U.K. Ministry of Defence.
Infrastructure and Minerals (I&M) job income was $18 million in the first quarter of 2010 compared to job income of $24 million in the first quarter of 2009. The decrease in job income was related to completion or near completion of several water projects. 

Power and Industrial (P&I) job income was $14 million in the first quarter of 2010 compared to job income of $9 million in the first quarter of 2009. The increase in job income was primarily related to increased activity at an activated carbon project in Louisiana.



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