Dallas, Texas 09/18/2013 (Financialstrend) – McDermott International (NYSE:MDR) is a construction and engineering company that focuses on offshore O&G projects. Very recently, it reported a terrible quarter. It posted a $149.4 million net loss in comparison to the $52.7M income that it has in the same quarter, a year ago. Its revenue dipped by around 27%. This dismal performance has been primarily attributed to its reduced workload from 2012 and some sizeable project charges. The company’s competency at contract-management is definitely something that is in question at this point of time. The quarterly results were eroded by the $62m write-off on its deepwater project in Malaysia. In addition, there was a $38M charge to one project in Saudi Arabia.
Its operation in the Atlantic was singed as well and two contracts were written-off. In the quarter, there were 2 projects in Brazil that did not contribute any income though they brought in some revenue. The company’s management noted that the projects in Brazil were riskier and that no income can be expected from them in 2012.
What could possibly be considered to be good news is that McDermott International (NYSE:MDR) recognizes its contracting problems. It is now taking some aggressive steps to enhance the execution and bidding process. The first thing that it is doing is to overhaul the leadership of the company’s project-delivery teams. It has begun bringing in external employees as necessary. It is setting up some project-level incentive plans that align individual compensation more directly with project performance.
The company has also stepped up its bidding efforts in those areas across the globe where it feels that the prospects of making money are better. If the company is able to get a handle on its project management issues its share price seems interesting and the stock might just be a good buy.