Struggling Fluor Posts New $32.9-Million Dip
The Fluor Corp., still struggling to reverse nearly three years of red ink, posted a $32.9-million loss for the quarter ended July 31, bringing the company’s combined losses for the first nine months of its 1987 fiscal year to $118.9 million.
The Irvine-based engineering and construction company attributed the quarterly deficit to losses from its real estate holdings, higher taxes on overseas operations and interest costs on its debt.
In contrast, Fluor reported net income of $1.1 million in the third quarter of fiscal 1986. Last year’s earnings included a $27-million after-tax gain from the final payment on its headquarters in Irvine, which Fluor sold for $340 million. The company now leases space in the building.
For the first nine months of fiscal 1986, Fluor reported a $3.9-million loss.
Third-quarter revenues in 1987 were $909 million, down from $973 million in the same period last year. Revenues for the first nine months of fiscal 1987 were $2.7 billion, contrasted with $3.4 billion a year ago.
Tom Samuelson, an analyst with the Chicago securities firm Duff & Phelps, said the third-quarter loss shows that “Fluor is still in for a tough time. . . . It is not a robust turnaround by any means.”
May Break Even in 1988
Although some analysts had projected that Fluor might return to profitability this year, Samuelson said he expects the company to report a loss for fiscal 1987. The company could break even in 1988, he said.
Fluor officials said Fluor Daniel, the company’s engineering and construction unit, was profitable during the third quarter, excluding losses from lease payments on vacant real estate. In the same quarter of fiscal 1986, Fluor Daniel’s engineering and construction operations lost money.
“We are pleased with the profit advances Fluor Daniel is making, in spite of the lackluster conditions that still prevail throughout the engineering and construction industry,” Fluor Chairman David S. Tappan Jr. said in a prepared statement.
Although Fluor has been trying to increase its business by diversifying beyond large oil and gas projects, Samuelson noted that most of the company’s financial gains have involved cost-cutting efforts such as employee layoffs and last month’s decision to sell Fluor’s 90% interest in St. Joe Gold Corp. and other gold properties for $500 million.
Tappan has said the proceeds from the sale of St. Joe Gold will be used to pay down debt and eliminate net interest expenses that accounted for $10 million in the third quarter.
Fluor spokesman Rick Maslin said proceeds from the St. Joe Gold sale will be reflected in the company’s fourth-quarter figures.
