Weatherford's 2Q Pre-Tax Results - Analyst Blog
26 Julho 2012 - 5:05AM
Zacks
Leading oilfield services company Weatherford
International Ltd. (WFT) reported its preliminary second
quarter 2012 adjusted pre-tax earnings of $276 million – up from
$176 million a year before – on the back of record high sales.
Total revenue in the quarter increased 24% year over year to
$3,778.0 million and beat the Zacks Consensus Estimate of $3,652.0
million.
The Switzerland-based firm has been unable to come out with its net
income for the period due to unresolved accounting problems.
Operational Performance
North American revenue climbed almost 25% year
over year to $1,676.0 million. However, sequentially, it declined
by 4%. The sequential decline was mainly attributable to a low
level of operating activity in Canada due to an extended spring
breakup, which impacted all the product lines negatively.
Further, performance of Stimulation and Chemicals were partly
tempered by the timid natural gas environment. The segment posted
an operating income of $271 million compared with $244.0 million in
the year-ago quarter.
Middle East/North Africa/Asia revenue increased 8%
year over year and 10% sequentially to $668.0 million. The growth
was broad-based and came from increased operations in China,
Turkmenistan, Iraq, Oman, Saudi Arabia and Australia. The segment’s
operating income jumped to $44.0 million from the year-ago level of
$34.0 million.
Europe/SSA/FSU posted revenue of $652.0 million,
up nearly 10% year over year. The segment’s operating income
increased 35% year over year to $120.0 million. The strong
performance of this segment was primarily backed by robust
activities in the U.K., Russia, Kazakhstan and Congo.
Latin American revenue surged 57% year over year
and increased more than 16% from the preceding quarter to $782.0
million. Operating income expanded significantly to $104.0 million
from the year-ago level of $50.0 million.
Liquidity
As of June 30, 2012, Weatherford had $381 million in cash and cash
equivalents and long-term debt was $7,311.0 million. Weatherford
spent approximately $554.0 million in capital expenditures during
the second quarter of 2012. The company had earlier highlighted
that it expects to spend between 10% and 15% of its revenues over
this year.
Guidance
The company expects its third quarter 2012 earnings per share
between 30 cents and 33 cents. With respect to the balance of 2012,
the company maintained a positive but careful outlook for its North
American business. The company believes that the depressed natural
gas environment will likely be overshadowed by the predominance of
oil activity in Canada and the U.S. and anticipates modest revenue
and operating income growth compared with 2011.
Weatherford foresees sustained growth and expanding margins in
Latin America, underpinned by improvements in Argentina, Colombia,
Mexico and Venezuela.
The company also expects improvements in the Eastern Hemisphere in
2012, with increases in Europe, Sub-Saharan Africa and Russia.
Weatherford also expects continued recovery in the Middle
East/North Africa/Asia Pacific region aided by contributions from
the completion of hostile as well as fresh contracts with healthier
terms and pricing in the second half of 2012.
The effective tax rate is expected in the range of 37-39% for this
year.
Our Recommendation
Although we remain optimistic on Weatherford’s operational and
financial leverage to international growth in 2012, its weak
incapability to generate strong free cash flow as well as
competition from larger peers such as Schlumberger
Ltd. (SLB), Halliburton Co. (HAL) and
Baker Hughes Inc. (BHI) are causes of concern.
Weatherford holds a Zacks #3 Rank, which translates into a Hold
rating for a period of one to three months. Consequently, our
long-term Neutral recommendation remains unchanged at this
stage.
BAKER-HUGHES (BHI): Free Stock Analysis Report
HALLIBURTON CO (HAL): Free Stock Analysis Report
SCHLUMBERGER LT (SLB): Free Stock Analysis Report
WEATHERFORD INT (WFT): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Schlumberger (NYSE:SLB)
Gráfico Histórico do Ativo
De Jun 2024 até Jul 2024
Schlumberger (NYSE:SLB)
Gráfico Histórico do Ativo
De Jul 2023 até Jul 2024