Halliburton Posts Loss Amid North American Weakness -- 2nd Update
January 25 2016 - 2:51PM
Dow Jones News
By Anne Steele
Halliburton Co. laid off another 4,000 workers at the end of
last year as it lost money in the fourth quarter on its oil-field
drilling and services businesses, the company said Monday.
The company, a bellwether for the energy industry, was hurt by
asset write-downs and severance costs, as well as drastically lower
revenue from its North American division, Halliburton executives
told investors and analysts on a conference call to discuss
financial results.
Halliburton, the second-largest oil-field services firm behind
Schlumberger Ltd., is hunkering down for another tough year as oil
prices hover around $30 a barrel and its customers continue to
slash their budgets to deal with the downturn in energy
markets.
Exploration and production companies that pump oil and natural
gas are projected to cut their spending for the second year in a
row, said Halliburton Chief Executive Dave Lesar. That trend marks
the first time since the 1980s that energy producers have dialed
back their operations by such a large extent.
"Once the market has visibility of the trough, the recovery will
come into view," Mr. Lesar said, but adding that "2016 is simply
going to be a tough slog through the mud."
Worries about slowing oil demand in China and additional crude
supplies coming online from Iran have weighed heavily on the price
of oil so far this year.
In North America, which is Halliburton's largest region, sales
skidded 54% lower in the fourth quarter compared with the prior
year's period, to $2.16 billion. Customers in the U.S. and Canada
continued to curtail activity and ask for lower prices from
Halliburton and other suppliers, the company said.
Even so, analysts said Halliburton's margins held up better than
they had expected, particularly in North America, as the company
aggressively cut its costs. Halliburton reported operating profit
margins in North America of 1.9% in the fourth quarter. That is
down from 19.4% in the prior year's period but an improvement over
the third quarter of 2015.
"Halliburton delivered a considerably better-than-expected
operational result, with margins markedly outpacing our
expectations while revenues aligned with our estimate," said Bill
Herbert, an analyst at Simmons & Co. International, in a note
to clients.
The layoffs at the end of 2015 bring to 22,000 the number of
jobs cut since the 2014 peak, representing a 25% reduction.
The oil-field services giant is in the process of acquiring
Baker Hughes Inc., the third-largest energy company in this space,
in a $35 billion deal. But the merger has been delayed by antitrust
concerns from the U.S. Justice Department and other competition
authorities around the world.
Mr. Lesar told investors and analysts Monday that the deal is
still compelling even though it is taking longer than expected to
complete. The company remains committed to seeing it through, and
Halliburton has presented the Justice Department with a plan to
sell more businesses to satisfy concerns, he added.
The company reported a loss of $28 million, or 3 cents a share,
in the fourth quarter, compared with a year-earlier profit of $901
million, or $1.06 a share. Baker Hughes-related acquisition costs
of $79 million, or 9 cents a share, were recorded. Excluding
special items, per-share earnings from continuing operations were
31 cents, or flat from a year earlier.
Total revenue for Halliburton slumped 42% to $5.08 billion.
Analysts polled by Thomson Reuters were expecting adjusted
earnings of 24 cents on revenue of $5.11 billion.
Shares of Halliburton, which are down 26% over the past 12
months, were down 2% at $29.60 shortly after 2 p.m. EST.
Last week, Schlumberger reported a fourth-quarter loss as
revenue fell 39%. Schlumberger said it laid off an additional
10,000 workers, and hopes that will be the end of the personnel
cuts.
Baker Hughes is set to report its financial results on
Thursday.
Anne Steele contributed to this article.
Write to Alison Sider at alison.sider@wsj.com
(END) Dow Jones Newswires
January 25, 2016 14:36 ET (19:36 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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