Halliburton Beats Estimates on Improved Work Outside U.S.David Wethe
Halliburton Co., the world’s second-largest oilfield-services provider, reported fourth-quarter earnings that beat analysts’ estimates as customers around the world boosted spending at the end of the year. Shares rose the most in more than a year.
Excluding discontinued operations, the Houston-based company earned 63 cents a share, 2 cents higher than the average of 33 analysts’ estimates compiled by Bloomberg. Sales climbed 3.2 percent to $7.3 billion, which was more than the average of 24 analysts’ estimates.
Halliburton, which generated 56 percent of its sales in North America last year, is increasing its international operations to take advantage of increased oil-company spending globally.
“Across the board they did better than expected,” Stephen Gengaro, an analyst at Sterne Agee & Leach Inc. in New York, who rates the shares a buy and owns none, said today in a telephone interview. “We expected declines in North America. They just didn’t decline as much as expected.”
Halliburton rose 5.1 percent to $39.72 at the close in New York, the biggest gain since Dec. 20, 2011.
Explorers and producers around the world are expected to boost spending another 5.5 percent this year to a record $645 billion, Jim Crandell, an analyst at Dahlman Rose & Co., wrote earlier this month in a note to investors.
Operating profit margin outside the U.S. and Canada should average in the “upper teens” this year, Chairman and Chief Executive Officer Dave Lesar told analysts and investors today on a conference call. The margin was 17.6 percent in the fourth quarter, according to Bloomberg calculations.
In North America, where operating profit margin fell to 12.4 percent, the U.S. land margin is projected to have hit bottom in the fourth quarter, Lesar said.
Net income dropped to $669 million, or 72 cents a share, from $906 million, or 98 cents, a year earlier, Halliburton said in a statement today.
While North American operating income declined, the company’s region that includes the Middle East and Asia reported income that rose 43 percent to $243 million.
“They really hit a home run there,” said Brian Youngberg, an analyst at Edward Jones in St. Louis, who rates the shares a hold and owns none.
The shares have 23 buy and 12 hold ratings from analysts.
Schlumberger Ltd., the world’s largest oilfield services provider, reported Jan. 18 fourth-quarter earnings that beat analysts’ estimates as drilling in the U.S. Gulf of Mexico increased.