(Updated with details from conference call, CEO's 2009 outlook,
recent stock price.)
DOW JONES NEWSWIRES
KBR Inc.'s (KBR) fourth-quarter net income rose 24% on increased
revenue and strength in the government and infrastructure business
as results handily topped expectations.
The engineering and construction company is best known for its
logistical-support contract for the U.S. military, which it was
awarded in 2002 and which has since ballooned with the war in Iraq.
The company was spun off by Halliburton Co. (HAL), which separated
itself from KBR in 2007 as its work in Iraq became increasingly
controversial.
KBR won't be prevented from seeking new work from the U.S.
Defense Department or have its current contracts suspended after a
guilty plea to criminal charges of bribing Nigerian government
officials for more than a decade, Chief Financial Officer Kevin
DeNicola said during a conference call. KBR and Halliburton settled
federal charges earlier this month totaling $579 million, with KBR
paying the bulk of those fines. The settlement ends a long-running
investigation into an elaborate bribery scheme that helped KBR
executives obtain more than $6 billion worth of construction
contracts in Nigeria.
Chief Executive Bill Utt on Wednesday called 2008 an
"outstanding year," saying KBR posted record profitability. The
company recorded fourth-quarter net income of $88 million, or 54
cents a share, up from $71 million, or 42 cents a share, a year
earlier. The latest results included a 12-cent charge related to
the fines. Revenue increased 42% to $3.38 billion. Operating margin
rose to 4.5% from 3.4%.
Analysts polled by Thomson Reuters expected earnings of 40 cents
on revenue of $2.96 billion.
The global economic downturn is beginning to affect some KBR
business units, however, Utt said during the conference call.
Customers in the U.S. and Canada are delaying projects as they wait
for costs to come down, particularly in the oil sands region of
Canada, Utt said.
"It will take another three to six months for the...supply chain
to reduce its costs to allow owners to move forward on the next
round of projects," Utt said.
Work related to oil refining and liquefied natural gas is also
slowing down in some regions.
KBR's government and infrastructure business, which accounts for
half of the company's revenue, saw earnings surge 60% as revenue
rose 13% due to its work in Iraq. Energy-production profits gained
1.6% as revenue grew 36%. Business related to military services is
likely to remain stable in 2009, Utt said.
KBR's shares were down 43 cents, or 3.2%, at $13.04 Wednesday
afternoon. The stock has lost nearly two-thirds of its value since
early June.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com
-By Brian Baskin, Dow Jones Newswires; 201-938-2062;
brian.baskin@dowjones.com