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WIKI ANALYSIS
KBR, Inc. (KBR) is an international construction, engineering, and services company supporting the energy, government, and civil infrastructure sectors.[1] The Company operates in four segments:Hydrocarbons; Infrastructure, Government & Power ("IGP"); Services; and Other.[1] Revenue from operations in Iraq were 29%, 35%, and 43% of revenue in 2010, 2009, and 2008 respectively, marking decreasing revenues as the war in Iraq winds down.[1] Despite these losses, KBR is partially sheltered from the recession in the United States as a result of extensive operations abroad in countries such as Kazakhstan, Saudi Arabia, and Australia.[2]
Business Growth
Almost 80% of KBR's revenue comes from operations abroad, including operations in Iraq and Afghanistan.[2] As the wars in these two theaters come to an end, revenue will decrease. Revenue from IGP, the segment that deals with contracting in war zones, decreased by 32% between 2009 and 2010.[1] Revenue decreased from $6.3 billion to $4.3 billion in 2009 and 2010 respectively.[1]
Trends and Forces
Infrastructure, Government and Power Revenue Contingent Upon Government Spending
Approximately half of KBR's revenues come from government contracts in war zones such as Afghanistan and Iraq.[1] As operations in Iraq came to an end, KBR incurred a $2 billion loss as a result of decreasing U.S. military need.[1] Furthermore, as international allies end their operations in these theaters, they will have to rely on KBR less for material support.[1]
The Effects of the U.S. Recession are Partially Offset by Operations Abroad
Revenue from international operations has increased to nearly 80% of KBR's total earnings.[1] Though KBR is largely reliant on U.S. and Western government contracts, it has expanded into areas such as Central Asia and the Persian Gulf.[2] These projects namely include building infrastructure for emerging nations; KBR has announced multi-billion dollar contracts to help build mines in Australia and with Rio Tinto and Hancock Prospecting.[2]
Competition
KBR competes directly with a growing industry of government contracts that emerged to take advantage of spending in the aftermath of the terrorist attacks of 9/11, as well as traditional engineering and construction companies. These companies include:
References
- ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 KBR 2010 Annual Report
- ↑ 2.0 2.1 2.2 2.3 KBR ranked No. 10 on the Washington Technology 2011 Top 100
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