Halliburton reports earnings dip as Cheney bids farewell

Thursday, July 27th 2000, 12:00 am
By: News On 6

As its chairman and chief executive said goodbye to join the George W. Bush presidential ticket, Halliburton Co. reported Wednesday that its second-quarter earnings dipped from a year earlier.
Dick Cheney, who has headed the Dallas energy-services and construction company for five years, joined a conference call with investment analysts to offer his farewell.

Mr. Cheney said that while he regrets leaving Halliburton, "I have every confidence that Halliburton has a very bright future ahead of it.

"I think we've done a good deal over the last several years to strengthen the company and expand its size and reach and capability," he said.

In addition, "I think the company is in excellent hands," he said, referring to his successor, David J. Lesar.

For the quarter ended June 30, Halliburton reported net income of $75 million, or 17 cents per share diluted, on revenue of $2.87 billion.

That compares to net income of $83 million, or 19 cents per share diluted, on revenue of $3.05 million in second quarter 1999.

Although its year-over-year results declined, Halliburton beat analysts' expectations.

On average, analysts had projected the company to report per-share earnings of 16 cents, according to First Call/Thomson Financial.

The energy industry has been buoyed by stronger prices for oil and natural gas, but the benefits are taking some time to filter through all parts of Halliburton's organization, company officials said.

The engineering and construction side of its operations saw a sharp decline in revenue, outweighing increased revenue for oil-service businesses.

Halliburton's energy-services group benefited from the stronger oil and gas prices, with revenue up 13 percent from $1.68 billion in second quarter 1999 to $1.9 billion last quarter.

However, the engineering and construction group saw its revenue drop 29 percent, from $1.37 billion in the 1999 period to $971 million in second quarter 2000.

Mr. Lesar, who is moving up from president, said the company saw a lot of good signs in the earnings.

In the energy-services side, Halliburton has seen a strong recovery in U.S. exploration and production and is now waiting to see that strengthening in international drilling, Mr. Lesar said.

He blamed the decline at its engineering and construction group mainly on its Kellogg Brown & Root unit, which saw reduced customer spending for "downstream" projects such as chemical or processing plants.

He and Gary Morris, executive vice president and chief financial officer, said they anticipate that the construction and engineering business will begin recovering as customers finally increase their spending in coming months.

"I think it's fair to say the delays have been more prolonged than we thought they would be," Mr. Morris said.

However, customers are not canceling projects; they continue to keep the projects alive while delaying a decision to proceed, he said.

Mr. Lesar, who takes over the top jobs at Halliburton when Mr. Cheney's resignation takes effect Aug. 16, said he doesn't plan major management changes at Halliburton.

"I clearly intend to continue on with the fundamental strategy we put in place, maybe add some new intensity and focus because I tend to operate in a little bit of a different style," he said.

"But that focus will continue to include renewed commitment to the energy industry," Mr. Lesar continued.

Halliburton's goal is that every product and service will be "best in class," Mr. Lesar said.

In addition, he said, "Growth obviously will be the keystone of that strategy and something that we will push in our business lines."