Engineering services firm McDermott International missed consensus earnings forecasts as the company reported weaker than expected marine demand in Asia Pacific, which partially offset gains from strong demand in the Middle East.
Profit was down 22% on the year, as the company reported income from continuing operations of $52.7 million, or $0.22 per diluted share, for the 2012 second quarter. The results of the 2012 second quarter compare to income from continuing operations of $63.7 million, or $0.27 per diluted share, in the corresponding period of 2011.
The downswing was despite revenues for the offshore platform and marine specialist rising to $889.2 million for the 2012 second quarter compared to $849.8 million in the corresponding period of 2011, with increased fabrication and marine activity in the Middle East and Atlantic, emphasizing that margins on work in the Middle East can often be low margin.
Total costs rose 6% to $807.2 million, outpacing the rate of revenue growth.
Analysts on average had expected a profit of 22 cents per share on revenue of $893.8 million, according to Thomson Reuters I/B/E/S.
“We are pleased with the results of our 2012 second quarter which keeps us on pace for the year,” said Stephen M. Johnson, Chairman of the Board, President and Chief Executive Officer of McDermott.
“Both the Middle East and Asia Pacific segments reported solid operating results in the 2012 second quarter, with each providing over $46 million in operating income. As anticipated, the Atlantic segment reported an operating loss; however, its 2012 second quarter level was an improvement as compared to the 2011 second quarter. McDermott is in a solid financial position, with a strong balance sheet and a solid backlog of work, and we believe our growth strategy is well designed for the markets we serve,” Johnson added.
At 30 June, the company’s backlog was approximately $5.7 billion, compared to $5.8 billion and $4.7 billion at 31 March, 2012 and 30 June 2011, respectively.
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