KBR Inc. has announced its first quarter 2014 financial results. Net income attributable to KBR was a loss of US$ 43 million. Consolidated revenue in the first quarter of 2014 was US$ 1.6 billion compared to US$ 1.8 billion in the first quarter of 2013. Gross profit in the first quarter of 2014 was US$ 39 million compared to gross profit of US$ 156 million in the prior year quarter.
Gas monetisation revenue was US$ 400 million, a decline of US$ 195 million. This was primarily due to reduced business volumes on a gas to liquid (GTL) project in Nigeria and an LNG project in Algeria as these major projects were completed or neared completion. Gross profit was US$ 95 million, an increase of US$ 6 million, primarily as a result of fees on additional approved man hours on an LNG project in Australia. Gross profit of US$ 33 million related to the favourable preliminary closeout with a client on an LNG project largely matched the cost savings of approximately US$ 30 million recognised on the same project in the prior year.
Hydrocarbons revenue was US$ 452 million, an increase of US$ 110 million. Hydrocarbons gross profit declined US$ 27 million to US$ 22 million. Revenue growth was the result of increased engineering, procurement and construction activities on ammonia, urea and ethylene projects currently being executed in North America. The decrease in gross profit was primarily due to a higher mix of revenue on EPC projects compared with higher margin services projects, US$ 8 million in lower margins on two Middle East service projects, and increased proposal spending. In addition, there was a US$ 9 million increase in reserves and costs on two North American EPC projects; one relating to an ongoing commercial dispute on a completed project and one on a project nearing completion.
Significant achievements and awards year to date
- Awarded a pre FEED and Federal Energy Regulatory Commission submission contract for Gulf Liquefaction Company, LLC, located in Jackson County, Mississippi.
- An onshore LNG portfolio contract by Shell Global Solutions International BV. KBR will develop pre FEED and FEED contracts for Shell’s worldwide LNG projects with an opportunity to continue as the lead party in consortia for projects in the execution phase.
- KBR won the Maersk Oil FEED Contract from Maersk Oil UK and its co venturers JX Nippon Exploration and Production (UK) Limited and Britoil (BP) for the Culzean Field Development Topsides located in the UK sector of the Central North Sea.
- A five year Master Services Agreement (MSA) with DuPont Engineering to provide engineering, procurement and construction management (EPCM) services for most DuPont facilities in the US and Mexico.
- A three year general construction contract from a major steam assisted gravity drainage operator at an oilsands facility near Fort McMurray, Alberta, Canada.
- A FEED contract by Emirates National Oil Company Processing Company LLC for the upgrade of its condensate refinery at Jebel Ali, Dubai. Won a project management consultancy contract for participation in a major revamp program for Russia’s largest refinery.
Stuart Bradie, President and CEO, KBR said, ‘KBR posted a loss of US$ 0.29 /share in the first quarter of 2014. Overall results were disappointing and were negatively impacted by losses stemming from our Service segment’s pipe fabrication and model assembly facility in Canada and on two US construction projects, as well as underperformance in our IGP business. Our hydrocarbons and especially our gas monetisation segments continued their strong performance. The company will undergo an in dept strategic review of its businesses and how we can best address the markets we serve. Once completed, we will provide an update to the market and expect to resume our previous practice of providing earnings guidance. Looking forward, the company’s market position remains strong with a good pipeline of early stage front end engineering design and engineering procurement and construction opportunities throughout the world.’
Adapted from press release by Claira Lloyd
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