The firm also reaffirmed its earnings-per-share guidance at $US1.07 ($A1.36) to $1.22, excluding US government legacy-related legal costs.
KBR’s net income for Q1 2015 was $44 million, excluding $5 million in pre-tax US government legacy legal fees, compared to a net loss of $43 million in Q1 2014.
Consolidated revenue in Q1 2015, however, was $1.4 billion compared to $1.6 billion a year ago.
KBR CEO and president Stuart Bradie said the first quarter results reflected improved operational and financial performance across business segments and continued progress against cost reduction targets.
“While KBR’s transformation continues we are on track to achieve the 2016 targets set forth on our analyst day for segment profit margin percentages and a $200 million annual cost reduction,” he said.
“To date, the company has identified and actioned more than $100 million of the $200 million savings target. The identified savings will be realised throughout 2015.”
Bradie said that while oil prices remained depressed, KBR’s technology and project delivery capability for natural gas derivative products and associated downstream facilities positioned it well for project awards this year.
“We are also in sole source negotiations for two major UK Ministry of Defence (MoD) contracts where awards are expected by the end of 2015,” he said.
“In recent months we have continued to win a number of key contracts that reflect our strategy, including a new engineering JV with the State Oil Company of Azerbaijan Republic (SOCAR) to establish a new engineering and support services company in Azerbaijan, the Black Sea LNG FEED award, a major US construction award and pre-FEED work for two world-scale ammonia facilities.”
KBR’s technology and consulting business recorded a gross profit of $19 million, an increase of $4 million, while revenue was down $19 million to $72 million. The company attributed the drop to a shift to more technology-related activities during the quarter on olefins, syngas and refining projects versus sales of proprietary equipment the prior year.
“Looking forward, while lower oil prices are impacting workloads for the upstream consulting business, the company sees continued global technology opportunities for syngas, refining and olefins projects including new builds and revamps to improve efficiencies of existing facilities,” KBR said.
Its engineering and construction unit recorded a gross profit of $55 million, up $26 million, primarily driven by solid financial and operational performance and lower overheads from the company’s cost reduction initiatives.
The increase in gross profit was also impacted by the completion of certain loss making North American construction and module fabrication and assembly projects in 2014.
The 1Q14 result also included a $33 million net favourable settlement on an LNG project in Africa that did not reoccur in 1Q15.
