Rowan 2Q Profit Falls 19% On Weak Drilling Demand

   DOW JONES NEWSWIRES 
 

Rowan Cos.'s (RDC) second-quarter earnings fell 19% as the oilfield-services and manufacturing company was hurt by slumping demand and rates, though the results topped Wall Street's views.

President and Chief Executive Matt Ralls said despite continued weakness in global drilling demand, the company's contract backlog and "heightened focus" on cost cutting contributed to "solid performance from our drilling operations." Rowan expects excess rig capacity to continue weighing on day rates, though the company sees signs of strengthening demand in some areas.

Drilling-related companies have been hurt by a steep drop in demand in recent quarters, though there have been some signs the sector has found a bottom. Rowan has been cutting costs and recently tapped bond markets for fresh capital - one of many to do so as investors return to the markets.

Rowan reported a profit of $96.6 million, or 85 cents a share, down from $120.6 million or $1.06 a share, a year earlier. The latest period included a 7-cent tax-related benefit. Revenue decreased 18% to $482.2 million.

Analysts polled by Thomson Reuters most recently were looking for earnings of 75 cents on revenue of $435 million.

At its drilling operations, revenue fell 13%, primarily on lower rig utilization, as earnings fell 19%. Offshore rig-utililization rates fell to 78% from 96% a year earlier and 93% in the prior quarter while land rates fell to 60% from 97% and 74%, respectively.

At its smaller manufacturing business, which also includes mining, forestry and steel products, revenue was down 27% while earnings fell 89%.

Shares closed at $22.43 on Monday and didn't trade premarket. The stock has more than doubled in the past five months from a 10 1/2-year low, though it is still down 40% in the past year.

-By Tess Stynes, Dow Jones Newswires; 212-416-2481; [e-mail]