Thursday, October 30, 2003

Profits, Sales Soar at Kellogg, Brown, and Root

AFP story from the Yahoo Wire...

HOUSTON, United States (AFP) - US oil industry services giant Halliburton said Thursday its Kellogg, Brown, and Root unit's profits rose four-fold and sales leapt 80 percent, boosted by work in Iraq

Profits from the unit's operations soared to 49 million dollars in the three months to September from 12 million dollars a year earlier, helped by "government services activity in the Middle East," Halliburton said.

KBR, the engineering and construction division that netted a no-bid government contract to help rebuild Iraq's shattered oil industry, also posted an 80-percent jump in sales to 2.3 billion dollars.

Iraq-related work by KBR produced revenue of 900 million dollars in the three-month period and delivered an operating profit of 34 million dollars, it said.

KBR's results boosted the entire Halliburton group, of which Vice President Dick Cheney (news - web sites) was chief executive from 1995 to 2000.

Halliburton sales rose 39 percent to 4.1 billion dollars in the third quarter.

"This increase is largely attributable to additional activity in Engineering and Construction Group government service projects, including work in the Middle East," Halliburton said.

But net profit at the group fell to 58 million dollars or 13 cents a share from a year-earlier net profit of 94 million dollars or 22 cents a share, the group said.

The profit was hit by a 34-million-dollar net loss from discontinued operations and by a 77-million-dollar charge related to a Texas court finding against a subsidiary for breaching confidentiality agreements.

Overall, US government contracts for Iraqi reconstruction given to Halliburton are now worth some two billion dollars and could go higher, the army said last month.

The deals have been sharply criticized by some members of Congress, especially because some were awarded without competitive bids.

The contract to rehabilitate Iraqi oil fields has been revised upward to 948 million dollars, army spokesman Dan Carlson said.

A separate 10-year army field support contract to Halliburton awarded in 2001 has been boosted to one billion dollars, the spokesman added.

Halliburton chief executive David Lesar, meanwhile, is fending off Democratic lawmakers' accusations that the group overcharged the US government for imported gasoline in Iraq.

The US government pays Halliburton between 1.62 and 1.70 dollars for each gallon of gasoline it imports from Kuwait, including a 91- to 99-cent transportation fee, according to Democratic representatives Henry Waxman and John Dingell.

But Waxman and Dingell said they had been assured by industry experts it was possible to bring gasoline from Kuwait into Iraq for between 15 cents and 25 cents a gallon.

"The overcharging by Halliburton is so extreme that one expert has privately called it 'highway robbery,'" the lawmakers said.

Lesar has rejected the allegations, arguing that Halliburton had become a "political target" because of Cheney's past involvement with the company. Cheney has denied any role in Halliburton's Iraq contracts.