Halliburton Co.'s government contracts in Iraq boosted revenue in an otherwise poorly performing segment and helped swing the company to a $26 million profit in the second quarter.
The profit, equal to six cents a share, was a sharp reversal from a loss of $498 million, or $1.15 a share, a year ago. The earlier period's results included hefty charges related to asbestos claims and losses on an offshore construction project for Brazil's state oil company.
The Houston company reported an 11% increase in revenue, to $3.6 billion from $3.24 billion. The oil-field services and construction company said work in Iraq, including a controversial no-bid contract to rebuild the postwar oil industry, contributed 9% of the quarter's total revenue.
Analysts estimated that the work added two to three cents a share to earnings and helped Halliburton's engineering and construction business, where cost overruns and the asbestos claims have hurt results. "Iraq was a very nice boost for them this quarter," said Scott Gill, an analyst with Simmons & Co. in Houston.
In the latest quarter, Halliburton took a previously announced $104 million after-tax charge related to the Brazilian project.
There were 37,000 new asbestos claims in the quarter, company officials said, as plaintiff lawyers rushed to file new cases before an expected settlement or congressional legislation. A company official said that completing the documentation of 425,000 claims and a reorganization plan, including a bankruptcy-law filing for its construction unit, by the end of September was "achievable." Most of the asbestos liability stems from Dresser Industries Inc., which Halliburton acquired in 1998 when Vice President Dick Cheney was Halliburton's president and chief executive.
Meanwhile, world-wide demand is picking up for oil-field services, Halliburton's other large business segment. As economic and political uncertainty lessens, "we are starting to see some of our customers start to have the desire to spend additional money," said Dave Lesar, Halliburton's chairman and chief executive.
He expects this increased demand to drive earnings per share from continuing operations up 45% to 32 cents a share in the third quarter from 22 cents a year earlier. Still, the company said it reduced its capital-expenditure budget for this year by $100 million to $600 million.
Mr. Lesar also said the position of chief operating officervacated last month when Douglas Foshee left to become chief executive of El Paso Corp.wouldn't be filled. The heads of Halliburton's oil-field services and construction segments will report directly to Mr. Lesar.
At 4 p.m. in New York Stock Exchange composite trading Thursday, Halliburton shares were up 5%, or $1.06, at $22.17 apiece.
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