Uncertain Future for KBR

KBR could be sold following Halliburton's reported losses for the third quarter of 2004. The company incurred £125m in charges to fund an asbestos settlement inherited from its purchase of DII Industries several years ago. A federal judge approved KBR's £2.28bn settlement for the asbestos and silica liability earlier this year.

KBR posted £27m operating losses in the quarter against £26.6m profits a year ago. This was mainly due to £38m in project losses, plus £9.8m in costs to restructure the operating unit. It is not yet known what Halliburton's future intentions are for KBR.

Excluding the asbestos settlement charge, Halliburton's profit from continuing operations was £101m, against £50m previously. Halliburton commented total revenue rose 16% to £2.6bn as a result of increased activity from KBR's Middle East operations and record revenues at its Engineering Services Group.

KBR is the largest private contractor in Iraq where contracts have amounted to £2.83bn in revenues so far this year and about £4.78bn since the start of the war. These contracts have been under scrutiny by the US military because of billing disputes.

According to the International Monitoring and Advisory Board earlier this month, it has been agreed to commission a special audit of sole-source Pentagon contracts awarded to energy services giant Halliburton and paid for with Iraqi oil money. The watchdog said the US government agreed to order the audit after it complained about contracts granted to Halliburton, headed up by US vice-president Dick Cheney from 1995-2000, without competitive bidding during the occupation of Iraq.

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Added to site on 27/10/04

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