FMC Technologies Inc., the largest U.S. provider of subsea equipment to the oil and natural gas industry, fell the most in more than a year after lowering its earnings projection.
FMC Technologies, based in Houston, fell 7.9 percent to $39.70 at the close in New York, the most since Aug. 4, 2011.
The company lowered its prediction for this year’s earnings to a range of $1.85 to $1.95 a share, from an earlier forecast of $2.10 to $2.20, according to a statement the company released yesterday after the market closed. Activity in the company’s North American surface technology unit, which sells hydraulic fracturing equipment and services, is declining faster than anticipated, according to the statement.
“The surface is bad and that gave it a 2.5 percent move down,” Brian Uhlmer, an analyst at Global Hunter Securities in Houston who rates the shares at neutral and owns none, said today in a telephone interview. “The discussion on how subsea is not going to improve drastically throughout all of 2013 is what gave it that second leg down.”
The company expects its subsea operating profit margin for all of this year to be 11 percent to 12 percent, Chief Financial Officer Maryann Seaman told analysts and investors today on a conference call.
FMC Technologies may see a “modest” improvement next year in its margin, Chief Executive Officer John Gremp said on the call.
“We’ve said the pricing improvement we expect is not going to really occur until 2014,” Gremp said.
Once-surging profits from hydraulic fracturing, or fracking, are fading as oil and gas producers become more cautious about spending amid lower energy prices and global economic troubles that are damping demand.
Equipment now exceeds demand by 30 percent, measured by the amount of horsepower available to drive the fracturing process, with about 15.6 million horsepower competing to meet demand for 12 million, according to PacWest Consulting Partners LLC, a Houston-based industry adviser.