THE surge in fourth-quarter revenues reported by Halliburton, the oil services company favored by the US government with contracts for rebuilding Iraq, underlines the spectacular war dividend being enjoyed by select US companies.

Revenues at Halliburton, vice president Dick Cheney's old firm, jumped 63% to $5.46bn (£3bn) almost entirely because of its Iraq contracts and other spending related to the war.

Analysts and investors were surprised by the strength of the revenues although the stock market has been anticipating such results for some time.

Investors brushed aside a $1.1bn litigation charge related to asbestos claims, which in fact pushed the company's quarterly earnings into the red.

Halliburton is not the only winner. Bechtel, another major contractor in Iraq with strong Administration contacts, is also thought to have made significant profits from the US government but the details are less well-known because the company is privately held. It was recently awarded a further $1.8bn contract in Iraq.

There are indirect benefits too, with aerospace firms big beneficiaries of higher defense spending. Lockheed Martin recently reported a 15% rise in fourth-quarter sales while Raytheon's sales climbed from $5.1bn to $4.7bn over the same period.

Defense has saved Boeing from a stagnant commercial sector and now contributes more to the company's bottom line. The rescue has not come free, however, with a series of damaging scandals over government links.

New chairman Harry Stonecipher says it is doing its best to 'to deal with this perception that we're a bunch of crooks'.

Copyright 2004 London Evening Standard

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