KBR, Inc., has announced its second quarter 2014 financial results. Net loss attributable to KBR was US$ 8 million, compared to a net income attributable to KBR of US$ 90 million, in the second quarter of 2013. Consolidated revenue in the second quarter of 2014 was US$ 1.7 billion compared to US$ 2 billion at the same time last year.
Gas Monetisation revenue was US$ 362 million, down US$ 231 million, primarily due to reduced business volumes on a GTL project in Nigeria and an LNG project in Algeria as these major projects were mainly complete last year. Gross profit was SU$ 48 million, down US$ 32 million, mainly due to additional fees and recoveries recognised on an LNG project in 2013 that did not reoccur in 2014 and higher bid and proposal costs related to multi billion dollar EPC projects that the company is pursuing in 2014 for expected awards next year.
Gas Monetisation equity in earnings of unconsolidated affiliates was US$ 18 million, up US$ 1 million, due to increased activity on an LNG project in Australia. This project continues to perform well.
Hydrocarbons revenue was US$ 533 million, up US$ 189 million, while Hydrocarbons gross profit was US$ 34 million, down US$ 10 million. Revenue growth is primarily due to the high volume of EPC projects the company is executing for the downstream ammonia, urea and ethylene markets in North America. During the quarter, the segment has solid bookings globally, particularly in petrochemicals and refining. The company expects additional new awards in North America in the second half of the year driven by continued strong shale gas project economies. The decrease in gross profit has been attributed to the shift in business mix from lower revenue with higher margin services projects to higher revenue with lower margin EPC projects and increased proposal costs related to the high volume bid activity the company is seeing in the segment.
Q2 significant achievements and awards
- KBR was awarded the FERC front end engineering and design contract for the Gulf LNG Liquefaction Company, LLC.
- The company was awarded the Maersk Oil FEED contract for the Culzean Field Development Topsides.
- KBR was awarded a project management consultancy contract for participation in the major revamp program for the largest refinery in Siberia.
Stuart Bradie, President and CEO, KBR Inc., said, ‘while our second quarter consolidated results improved sequentially, they remain well below our expectations and reflect ongoing losses in our Canadian pipe fabrication and module assembly business. However, we delivered significantly improved overall bookings, particularly in our Hydrocarbons and Infrastructure, Government and Power segments and our Gas Monetisation and Hydrocarbons segments continue to perform well. Looking forward, we have a number of good Engineering, Procurement and Construction prospects in our Gas Monetisation and Hydrocarbons segments, especially in North America. Fundamentally, KBR remains a strong, global economy with talented people and a diverse portfolio of businesses and technical capabilities. Our goal is to deliver safe, best in class operational performance, improved cash management and efficient capital allocation.’
Adapted by Claira Lloyd
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