Fluor Suffers $39.5-Million Loss in Quarter : Back-to-Back Deficits Worst in Its 73 Years
Fluor Corp., racking up the worst back-to-back quarters in its 73-year history, on Thursday reported a $39.5-million loss for the second quarter of fiscal 1985 and a loss of $72 million for the first six months of the year.
“We’ve never had two quarters anything like this,” a spokesman for the Irvine-based construction and natural resources company said. The consecutive quarterly losses are in sharp contrast to the results in the same periods last year, when Fluor reported profits of $4.5 million for the second quarter ended April 30 and $21 million for the first six months.
Revenue, too, dropped in the second quarter, down 8% to $1.1 billion. Revenue for the first six months was down nearly 9% to $2.1 billion.
Despite the results, David S. Tappan Jr., Fluor’s chairman and chief executive, said in a prepared statement that the company’s operating losses “appear to be bottoming out.” New engineering and construction orders have improved for six consecutive quarters, nearly doubling in the past year, Tappan said.
Tappan also said that “abnormally low” commodities prices appear to be firming--a condition that could benefit Fluor’s St. Joe Minerals Corp. subsidiary--and that a labor dispute at St. Joe’s lead mining operation was recently settled.
“Fluor continues to be in sound financial condition,” he said.
The latest quarter’s loss is not expected to result in any significant layoffs among Fluor’s worldwide work force of 32,000, the company spokesman said.
Tappan said that, for the first six months, Fluor booked $2.9 billion in new orders, compared to $1.5 billion a year ago. And second-quarter new orders were $837 million, compared to $480 million.
Through the Grinder
The increase in new orders is a sign that Fluor may be on the way back, analysts said.
“I’m seeing light at the end of the tunnel,” said Paul Whelan, an analyst at Pershing Co. in New York.
Fluor has been “through the grinder,” Whelan said, but at least the company’s order rate is fast improving. “Things could be a heck of a lot worse,” he said.
By trimming its work force nearly 25% over the past four years and more recently selling some assets, Fluor is doing about all that it can to cope, another analyst said.
But Tappan said the company still plans to do more through an “aggressive cost-reduction program.”
By October, the company expects to sell nearly $500 million worth of real estate, including its headquarters in Irvine and a facility in Sugarland, Tex. In addition, Fluor recently picked up $101 million from the sale to Shell Oil of a number of oil tracts in the Gulf of Mexico.
Since October, Fluor’s long-term debt has been reduced about 15%, or about $132 million, Tappan said.