FMC Technologies Inc., the largest U.S. maker of subsea equipment for energy producers, fell the most in more than two years after lowering the profit margin forecast for its largest business unit.
FMC Technologies declined 8.6 percent to $52.80 at the close in New York, the biggest drop since August 2011. The operating profit margin for the subsea technology unit is expected to be 11 percent this year, Chief Financial Officer Maryann Seaman told analysts and investors today on a conference call. That’s down from the 12 to 13 percent forecast in September.
“This is largely the result of a shortfall in the eastern region, where we experienced higher project completion costs and slower progress in optimizing our cost structure,” Chief Executive Officer John Gremp said on the call. Backlog in the eastern region, which encompasses Europe, Africa and Russia “is down almost $600 million from where we expected.”
The Houston-based company yesterday reported third-quarter earnings that missed analysts’ estimates as it lowered this year’s earnings guidance to $2 to $2.10 a share, from a previous range of $2.10 to $2.25. FMC reaffirmed guidance for next year’s subsea margin in the range of 14 to 15 percent.
Customer spending industry wide on subsea valves, pipelines and cables to build underwater oilfields will grow to a record $13.9 billion this year, a 66 percent jump over the $8.4 billion spent last year, industry consultant Quest Offshore Resources said in March.