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KBR falls on 2012 guidance cut, weak 2013 outlook

NEW YORK (AP) -- Shares of KBR Inc. fell Friday after the engineering company and contractor cut its profit prediction for 2012 and issued a disappointing outlook for 2013.

THE SPARK: KBR said late Thursday that it now expects a 2012 profit of $1.95 to $2.10 per share, down from its October guidance of $2.60 to $2.80 per share. Both estimates exclude a large write-down the company took during the third quarter.

Analysts polled by FactSet expected the company to post a profit of $2.66 per share.

For 2013, KBR said it should earn $2.45 to $2.90 per share, which fell below analysts' estimates of $2.95 per share.

THE BIG PICTURE: Houston-based KBR provides engineering, construction and other services to customers in the energy, industrial, government and other sectors.

KBR said Thursday that it expects to take major charges related to its minerals and U.S. construction divisions during the fourth quarter of 2012 and said labor costs have been higher than it thought.

The company also said some contracts awarded in late 2012 were delayed. As a result it expects to earn 90 cents to $1.10 per share in the first half of 2013, with stronger results in the second half of the year.

THE ANALYSIS: Sterne Agee analyst Michael Dudas backed his "Neutral" rating and $32 price target for the stock.

"Although disappointing for the near term, we maintain our opinion that KBR remains a strong and credible contractor in the liquefied natural gas space," Dudas wrote in a note to investors.

THE SHARES: Down $2.84, or 9 percent, to $29.16 in heavy midday trading, after dropping as low as $29.10 earlier in the day. Over the past 52 weeks, the company's shares have traded between $22.09 and $38.

KBR shares gained about 7 percent in 2012.