Fluor Reports $60.4-Million Loss for Year : Results Are Improvement Over Fiscal ‘85, But Core Business Still Lags
Despite gains on the sale of assets, Fluor Corp. on Tuesday reported a $60.4-million loss for its 1986 fiscal year.
Though its massive restructuring plan failed to return the company to profitability, the results were still a marked improvement over the $633.3-million loss that Irvine-based Fluor suffered in its preceding fiscal year.
The loss came largely from Fluor’s engineering and construction businesses, where cost overruns cut into earnings and new orders slowed in a competitive marketplace.
Fluor’s revenues for fiscal 1986, ended Oct. 31, were $4.66 billion, up from $4.1 billion for the prior year.
In the fourth quarter the company lost $56.5 million, compared with a loss of $569.9 million in the same quarter of fiscal 1985. Fourth-quarter revenues of $1.07 billion were down slightly from $1.15 billion a year earlier.
In the fourth quarter, Fluor took a $27-million loss from the sale of its offshore drilling operation. When that write-down was announced in October, analysts predicted it would contribute to a net loss for the year for Fluor.
On balance, however, Fluor profited from the sale of other assets earlier in the fiscal year, including a $27.1-million gain from the sale of its corporate headquarters to the Trammell Crow development company.
Fluor also raised $39 million from a public offering of 10% of the shares in St. Joe Gold Corp., a company formed by consolidating Fluor’s gold properties.
Herbert Hart, an oil industry analyst with the securities brokerage firm of Rowe & Pitman, said the “biggest disappointment” in Tuesday’s announcement was the loss sustained by Fluor’s core engineering and construction business. He said those units were “supposed to turn the corner by this time” by aggressively diversifying into industrial and commercial projects rather than concentrating on oil refineries and other energy-related facilities.
Fluor Constructors Inc., the company’s unionized construction arm, contributed operating losses from “sizable overruns on contracts awarded under extremely competitive market conditions,” Fluor said.
At the end of fiscal 1986 Fluor had $3 billion in new orders for construction and engineering work, down from $4.5 billion a year before.
A bright spot for the year was the return to profitability of Fluor’s Natural Resources Group, said Fluor spokesman Rick Maslin. Maslin said that although fiscal 1986 results for the Natural Resources Group are not yet available, it is clear that the group achieved operating profits because of an increase in coal sales and higher gold prices. He said that coal and zinc still showed losses in fiscal 1986, although the losses were not as severe as in the previous fiscal year.
