Weatherford's Taxes Weigh on 4Q EPS - Analyst Blog
27 Fevereiro 2013 - 6:40AM
Zacks
Leading oilfield services’ company
Weatherford International Ltd.’s (WFT) fourth
quarter 2012 adjusted earnings of 1 cent per share came in way
below the Zacks Consensus Estimate of 18 cents. The results also
dropped substantially from the year-earlier adjusted earnings of 13
cents. The earnings declined mainly due to the weakness in North
American earnings.
For full-year 2012, the company’s profit of 58 cents per share
lagged the Zacks Consensus Estimate of 68 cents. However, the
reported figure was above the year-earlier earnings of 45 cents per
share.
Total revenue, in the fourth quarter, increased more than 9% year
over year to $4,058.0 million, and surpassed the Zacks Consensus
Estimate of $3,903 million. Full-year 2012 total revenue increased
more than 17% year over year to $15,215 million.
Operational Performance
North American revenues decreased 1.1% year over
year to $1,682.0 million. The continued decline in the US land rig
count as well as oversupply of hydraulic fracturing capacity
contributed to the loss. The Stimulation and Chemicals segment was
also weak, with operating income of $226.0 million compared with
$381.0 million in the year-ago quarter.
Middle East/North Africa/Asia revenues climbed
26.1% year over year to $851 million. The increase was mainly
broad-based and additional activity in Saudi Arabia, Kuwait and
Oman contributed to the growth. The segment’s operating income
jumped 70.6% year over year to $58 million.
Europe/West Africa/FSU posted revenues of $669.0
million, up 9.9% year over year. The segment’s operating income
dropped 26.3% year over year to $59.0 million. Strong performance
in Russia, Romania and Norway aided the revenue growth.
Latin American revenues climbed 17.9% year over
year to $856.0 million, buoyed by Russia, Romania and Norway.
Operating income from this segment expanded significantly to $125.0
million from the year-ago level of $114.0 million.
Liquidity
As of Dec 31, 2012, Weatherford had $300 million in cash and cash
equivalents and long-term debt was $7,049 million. Weatherford
spent approximately $2.25 billion in capital expenditures during
2012.
Guidance
With respect to 2013, the company maintained a neutral outlook for
its North American business and expects moderate growth in revenue
and operating income.
Weatherford foresees sustained growth and expanding margins in its
Latin America region, supported by improvements in Argentina and
Mexico.
The company also expects improvements in the Eastern Hemisphere in
2013, with upside in Europe, Sub-Saharan Africa and Russia, as well
as stronger activity levels in the Middle East, North Africa and
Asia Pacific.
The annual effective tax rate in 2013 is expected to be about
34%.
Our Recommendation
We remain optimistic on Weatherford’s operational and financial
leverage to international growth in 2013. But the company’s
debt-heavy balance sheet, weak free cash flow as well as
competition from larger peers such as Schlumberger
Limited (SLB) are causes of concern.
Weatherford holds a Zacks Rank #3 (Hold). However, there are other
stocks in the oil and gas sector – NGL Energy Partners
LP (NGL) and Laclede Group Inc (LG) –
which hold a Zacks Rank #1 (Strong Buy) and are expected to perform
better.
LACLEDE GRP INC (LG): Free Stock Analysis Report
NGL ENERGY PART (NGL): Free Stock Analysis Report
SCHLUMBERGER LT (SLB): Free Stock Analysis Report
WEATHERFORD INT (WFT): Free Stock Analysis Report
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