McDermott Continues in Red in Q3

Houston-based McDermott International has suffered another deep quarterly loss of almost $1.9bn as a result of cost overruns at a number of projects.

The company’s revenues in the period came to $2.1bn, McDermott said in a report on November 4. It generated $2.3bn in revenues in the third quarter of 2018 in contrast, achieving a meagre net profit of $2mn.

McDermott blamed the loss on $1.5bn in impairment charges, connected with a recent slump in its stock price and increased costs at six projects in North, Central and South America. The company said there were “unfavourable changes in cost estimates” relating to its engineering, procurement and construction work at its Cameron LNG terminal in Louisiana and at Freeport LNG in Texas. Costs also rose at power plant and petrochemical projects, and an oil project off the coast of Mexico.

McDermott has now booked four quarterly losses in the row. But the company noted its order backlog remained “strong”, at $20.1bn, with $1.7bn in new awards secured during the quarter.

“We experienced continued strong backlog, with several significant customer project awards, including the Ichthys Phase 2a Gas Field Development Project in Australia, which we developed in conjunction with our integrated subsea-solutions partner, Baker Hughes, as well as a large LNG tank project on the US Gulf Coast,” CEO David Dickson commented.

McDermott booked an adjusted operating loss of $125mn in the third quarter, down from an income of $232mn a year earlier. Adjusted ebitda was negative $71mn, compared with positive earnings of $275mn in the third quarter of 2018.