KBR 1Q profit more than tripled with arbitration award

By JOHN PORRETTO AP Business Writer

HOUSTON (AP) - Military contractor and construction and engineering firm KBR Inc. said Friday that first-quarter profit more than tripled, helped by a gain from an arbitration award.

The Houston-based former subsidiary of Halliburton Co. said quarterly earnings rose to $98 million, or 58 cents per share, from $28 million, or 17 cents per share, a year earlier.

Revenue rose 24.3 percent to $2.52 billion from $2.03 billion in the same period last year.

Wall Street expected a profit of 34 cents per share on $2.30 billion in revenue, according to Thomson Financial.

Shares rose 8.7 percent, or $2.47, to $31 in premarket trading.

KBR, which split from Halliburton last April, recorded a $51 million gain from a favorable arbitration award, but profits were weighed down by a $12 million charge related to a U.S. Embassy project in Macedonia.

The company said income at its government and infrastructure division was $80 million in the quarter, up from $70 million a year ago. Results benefited from KBR's military contract work in Iraq, but continued to be hampered by the embassy job in Macedonia, which has experienced cost overruns. KBR also took a $24 million charge on that project in the second quarter last year.

Its services arm reported income of $13 million, up from $10 million a year ago, lifted in part by several North American construction projects and work with service and maintenance vessels in the Gulf of Mexico.

"I'm pleased with this quarter's operating results, in terms of profitability, project execution and growth over the last year," KBR chairman and chief executive Bill Utt said in a statement.

But Utt said he was disappointed in further charges related to the embassy project in Macedonia.

"Our teams are continuing to work hard to get that project back on track and completed," he said.

KBR's total backlog for continuing operations grew to $13.4 billion in the fourth quarter, up nearly 3 percent from the prior quarter and about 12 percent from a year ago.

Last month, the U.S. Army awarded KBR, DynCorp International Inc. and Fluor Corp. contracts worth up to $150 billion over 10 years to provide food, shelter and other services to U.S. troops overseas, including in Iraq and Afghanistan.

The Army originally picked the three companies for the logistics deal last June but had to re-evaluate its decision after a federal watchdog agency backed protests filed by two losing bidders.

Under the new contracts, KBR, DynCorp and Fluor will compete for individual task orders and will each be eligible to win contracts worth up to $5 billion a year over a period of up to 10 years.

KBR has been the prime contractor on the deal since Dec. 2001.