Sector News

KBR to Restructure in Bid for Lower Operating Costs

December 12, 2014
Chemical Value Chain
KBR Inc. plans to restructure its operations and shed or exit some noncore segments, though it plans to continue with its overseas troop-support business, following a strategic review as it aims to reduce its operating costs.
 
KBR expects the moves, which will focus the company on its hydrocarbons and international government-services businesses, to result in $800 million to $1 billion in write-downs and other one-time charges. The company is aiming to lower costs by at least $200 million a year by 2016.
 
KBR, once among the biggest military contractors in Iraq, in a news release Thursday morning had said it was reviewing options for the overseas military unit. But later in the day, KBR clarified that it is sticking with its troop-support business overseas despite falling sales and a $1 billion company disposal plan. KBR said its review relates to legal options for the business, which remains entangled in Iraq-era disputes that may reach the U.S. Supreme Court.
 
The former Halliburton Co. unit had been one of the key U.S. government contractors in Iraq following the 2003 invasion, providing logistical support for American forces, among other tasks. KBR has suffered declining revenue as defense budgets in the U.S., which had withdrawn from Iraq and scaled back its presence in Afghanistan, have been tight.
 
The strategic review was implemented by Chief Executive Stuart Bradie upon his arrival in June. At year’s end, KBR plans to reorganize into three major business units: technology and consulting; engineering and construction; and government services.
 
Businesses KBR plans to shed or exit include its building group and its fixed-price EPC Power, EPC infrastructure and U.S. Minerals and stand-alone construction segments.
 
KBR said it also continues to consider options for its Canadian module fabrication operations.
 
KBR didn’t disclose in a news release whether any job cuts would result from the restructuring.
 
By Tess Stynes. Doug Cameron contributed to this article.
 

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