Case Study National Oilwell Varco

727 Words3 Pages
National Oilwell Varco
National Oilwell Varco reported its fourth quarter and full year 2015 results on 3rd February. The company’s fourth quarter net income was $ 85 million, or $ 0.23 per fully diluted share, excluding other items that included pre-tax charges of $ 1,634 million for goodwill and other intangible asset write-downs, $ 139 million for restructuring and other charges and $ 7 million in FX losses due to currency devaluation in Argentina. The net income was down from $ 0.61 in the third quarter of 2015 on a comparable basis.
The company’s gross margin declined 210 basis points to 19.1 %. EBITDA was $ 308 million or 11.3 % of sales. The company’s working capital, excluding cash and debt, totalled $ 5.5 billion at the end of year 2015, down $ 422 million from the prior quarter. The company
…show more content…
The company reduced its global workforce, including contract labour, by 21 % through the last year. Further, it has closed down 75 facilities since mid-2014 (the start of the downturn) to retrench to a smaller, more efficient footprint. The decremental operating leverage was 32 % from 2014 to 2015, excluding charges from both years. As a result of these cost cutting measures, the company has been able to maintain a healthy cash flow from operations that will prove to be instrumental in withstanding the turbulent environment.
Orders drying up:
The worry for NOV at this moment should be that it is not getting new orders. For Rig Systems, National Oilwell Varco received just $ 89 million of new orders in the fourth quarter. The book to bill ratio has fallen to alarming level of just 10%. Making the life tougher for National Oilwell Varco are the order cancellations, which have further damaged the backlogs. As far as rig systems business is concerned, the total backlog has fallen 24 % from the third quarter and 52 % from the same quarter last year to $ 6.1 billion.

More about Case Study National Oilwell Varco

Open Document