UPDATE 2-National Oilwell expects flat margins in core business, shares fall
* Fourth-qtr operating margin for rig tech down 360 basis points - CFO
* Shares down as much as 5 pct
By Garima Goel
Feb 1 (Reuters) - National Oilwell Varco Inc, the largest U.S. oilfield equipment provider, expects margins to remain little changed this year in its largest business that helps prepare oil and gas wells for production.
Shares of the company fell as much as 5 percent to $69.55 in early trade on the New York Stock Exchange on Friday.
Operating margins for the rig technology business fell 360 basis points to 22.4 percent in the fourth quarter from a year earlier, Chief Financial Officer Jeremy Thigpen said in a conference call with analysts.
"Pervasive near-term headwinds in the North American market ... will significantly limit opportunities for land rigs as well as pressure pumping, coil tubing and other frack-related equipment," Thigpen said.
Oil and gas companies have slowed onshore exploration in North America as prices for natural gas and natural gas liquids remain low.
"Weaker operating margins in the rig tech segment eliminated some of the revenue strength...this was the only chink in the armor of the quarter," Raymond James analyst John Freeman wrote in a note.
The rig technology business contributed 51 percent to the company's revenue in the fourth quarter.
The company's fourth-quarter net income rose 16 percent to $668 million, or $1.56 per share, from $574 million, or $1.35 per share, a year earlier.
Excluding one-time items, the Houston-based company earned $1.49 per share. Analysts on average had expected earnings of $1.44 per share, according to Thomson Reuters I/B/E/S.
Revenue rose 33 percent to $5.7 billion, ahead of analysts' estimates of $5.3 billion.
Revenue in the rig technology business rose 25 percent.
Shares of the Houston-based company, which has a market value of about $32 billion, were down 4 percent at $71.19 in afternoon trading.
- Ukraine says Russian tanks flatten town; EU to threaten more sanctions |
- Seven NATO allies to create new rapid reaction force-report
- U.S. authorities investigate suspected threat against Obama: reports
- Putin says Russia must strengthen its economic, military position in Arctic
- China and Hong Kong poised for showdown over democracy