HALLIBURTON REPORTS THIRD QUARTER EARNINGS
HALLIBURTON REPORTS THIRD QUARTER EARNINGS DALLAS, Nov. 4 /PRNewswire/ -- Halliburton Company (NYSE: HAL) today
reported that its third quarter 1991 net income was $24.6 million or 23 cents per share, compared to $55.4 million or 52 cents per share in the 1990 third quarter. Third quarter 1991 earnings were lower than the prior year period primarily due to lower operating income from the company's Energy Services Group, a loss incurred on an engineering and construction contract, a higher effective tax rate, and a $30.4 million pretax gain on the sale of assets which benefitted third quarter 1990 results.
The Energy Services Group's 1991 third quarter revenues were $735.6 million, a decline of about 3 percent from the year ago quarter. The change resulted from a 21 percent decline of revenues in the United States, which was largely offset by the Group's growing international business where its revenues increased by 16 percent during the same period. Drilling activity in the United States during the third quarter of 1991 declined 20 percent from last year's third quarter, while important offshore markets declined an even greater 32 percent. The Energy Services Group's operating income was $48.9 million in the third quarter of 1991, compared to $78.8 million in the year ago period. The 1990 third quarter included an $11 million operating charge relating to the Iraq-Kuwait war. The reduced amount of the Group's operating income is primarily attributable to lower results of U.S. operations. A combination of lower levels of business activity, revenues that included a higher percentage of lower margin products and services, and modest increases in price discounting adversely affected profitability in the United States during the most recent quarter. However, strong revenue growth and improved margins resulted in increased profitability from the Group's international business operations during the quarter. The Engineering and Construction Services Group's 1991 third quarter revenues of $902.9 million declined 6 percent, compared to the 1990 third quarter. The Group experienced a 20 percent revenue increase by its international operations in the third quarter of 1991 as compared to a year ago, and international business accounted for 35 percent of revenues during the quarter compared to 27 percent in last year's quarter. The Engineering and Construction Group's operating income increased by 36 percent to $16.1 million in the third quarter of 1991. The third quarters of both 1991 and 1990 were adversely affected by nonrecurring charges. The 1991 quarter reflects $15.8 million of loss provisions relating to a contract in the Middle East, while 1990 results reflected $18 million of provisions for expected losses relating to the Iraq- Kuwait war. The Insurance Services Group reported a $200,000 operating profit in the third quarter of 1991 compared to an operating loss of $10.1 million in last year's third quarter. The year ago results included a charge relating to its workers compensation line of business that was $7.9 million higher than expected. Operating results continue to be hampered by poor industry-wide underwriting results. Halliburton Company's tax rate increased to 50 percent in the third quarter of 1991 compared to 43 percent in the same quarter last year. The higher 1991 tax rate resulted from a shift of profit to international markets with higher effective tax rates and the occurrence of losses in certain areas where they could not be fully tax benefitted. Thomas H. Cruikshank, chairman of the board and chief executive officer of Halliburton Company, said, "Our principal challenge is to achieve improved levels of profitability for the Energy Services Group. In 1991 profitability has been adversely impacted by the sharp curtailment of spending by our customers in the United States, largely in response to poor natural gas prices. Although the number of rigs drilling oil and gas wells throughout the world in the third quarter of 1991 declined 10 percent compared to the third quarter of 1990, the Group increased the amount of revenues generated per rig by about 8 percent during the year. "This performance demonstrates that the Group has been aggressive and successful in pursuing new business opportunities in international markets, as evidenced by the fact the Group now derives 59 percent of its revenues from international markets compared to 49 percent one year ago. These changes that we have experienced during 1991 emphasize the increasing importance of international markets and are expected to continue in the foreseeable future. "Therefore, the Energy Services Group is taking actions to adjust its organization to better meet the expected needs of its customers and enhance its profit opportunities. These actions include restructuring the Group's business units, consolidation of some of its administrative functions, closing or consolidation of certain field locations, and reducing the employment of its U.S. operations over the next several months by an additional 1,200 persons, over and above the 1,200 person reduction implemented during the third quarter. "These actions should be completed by the end of the first quarter of 1992. Although the company plans to record a charge in the fourth quarter of about $75 million pretax ($50 million after tax) to implement these actions, annual pretax cost savings in excess of $100 million are expected to follow. We believe that these actions along with other business strategies will result in improved profitability in 1992. "The Engineering and Construction Group continues to make excellent progress, notwithstanding the problem job in the Middle East during the third quarter," said Cruikshank. "Increased international growth is being experienced by Brown & Root Braun's petroleum and chemical business unit and by Brown & Root Marine. The Group continues to focus on numerous international business opportunities. The Group's Brown & Root Braun business unit was awarded a major contract in the third quarter to conduct an expansion and upgrade of the Ras Tanura refinery in the Kingdom of Saudi Arabia, and demonstrates a major success in implementing the Group's international strategy. Brown & Root Braun is program manager for the $12 billion project and is responsible for planning, conceptual design, detailed design, procurement, contract management and construction management." Halliburton Company is one of the world's largest diversified energy services, engineering, maintenance, and construction companies. Founded in 1919, Halliburton provides a broad range of energy services and products, industrial and marine engineering and construction services, and property and casualty insurance services. HALLIBURTON COMPANY (In millions except per share data) Periods ended Quarter Nine Months Sept. 30 1991 1990 1991 1990 Revenues: Energy services $ 735.6 $ 756.0 $2,170.3 $2,104.4 Engineering and construction services 902.9 959.0 2,798.3 2,710.8 Insurance services 84.8 76.0 274.8 257.7 Total revenues $1,723.3 $1,791.0 $5,243.4 $5,072.9 Operating income: Energy services $ 48.9 $ 78.8 $ 126.8 $ 193.8 Engineering and construction services 16.1 11.8 68.0 50.3 Insurance services .2 (10.1) 6.0 1.2 General corporate expenses (5.2) (5.3) (16.0) (14.5) Total operating income $ 60.0 $ 75.2 $ 184.8 $ 230.8 Interest expense (14.5) (9.2) (39.2) (25.1) Interest income 8.3 6.3 25.1 24.9 Foreign currency gains (losses) (.9) (2.0) (8.8) (9.8) Gain on sale of marine assets - 30.4 - 30.4 Other nonoperating, net (.4) (.1) (.5) (.5) Income before income taxes and minority interest 52.5 100.6 161.4 250.7 Provision for income taxes (26.3) (43.2) (74.3) (109.3) Minority interest (1.6) (2.0) (2.8) (2.7) Net income $ 24.6 $ 55.4 $ 84.3 $ 138.7 Net income per share (A) $ .23 $ .52 $ .79 $ 1.30 Average number of shares outstanding 106.9 106.7 106.9 106.7 (A) -- Per share amounts are based upon average shares outstanding. -0- 11/4/91 /CONTACT: Guy T. Marcus of Halliburton, 214-978-2691/ (HAL) CO: Halliburton Company ST: Texas IN: OIL SU: ERN GK -- NY012 -- 0593 11/04/91 09:15 EST
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|Date:||Nov 4, 1991|
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