Resurging Fluor Restores Dividend at 2 Cents a Share

Showing another sign of resurging health, the Fluor Corp. said Tuesday that it will restore its quarterly dividend to shareholders, which was suspended in early 1987 to help the Irvine-based company conserve cash while its business was in the doldrums.

The two-cents-per-share quarterly dividend that Fluor’s board of directors declared, payable starting Oct. 26 out of the company’s $13.4-million, third-quarter earnings, was called “nominal” by Tom Samuelson, an analyst with the Chicago-based investment firm of Duff & Phelps.

Nonetheless, he said, the reinstatement of dividends is a sign of recovery and probably of higher dividends to come.

The engineering, construction and natural resources company has previously said that it would like to establish its dividend at between 20% and 25% of per-share earnings.

Based on Wall Street analysts’ projections that Fluor will earn $79 million in fiscal 1989, Samuelson said, that would mean a quarterly dividend of about 5 cents a share. He said he expects Fluor to raise its dividend to that level within the next fiscal year. However, Fluor has not said when the target will be reached, according to company spokeswoman Deborah Land.

The dividend was 10 cents per share at the time it was suspended. Fluor had paid a quarterly dividend of 20 cents for 10 years before slashing it to 10 cents in the third quarter of 1984 in response to collapsing oil prices and sharp cutbacks in the construction of petrochemical plants that were Fluor’s specialty.

“As previously stated, the board’s intention has been to reinstate the dividend as soon as it could be sustained by operating performance,” Fluor Chairman and Chief Executive Officer David S. Tappan Jr. said in a prepared statement.

“Given our current level of profitability and favorable industry outlook, the company has clearly reached this point,” he continued. “The board elected to establish the dividend rate at a modest level. However, it will be reviewed quarterly.”

In the first nine months of its 1988 fiscal year, Fluor posted earnings of $32.8 million, compared to a net loss of $118.9 million during the same period of fiscal 1987. Over the last two years, the company has reduced its long-term debt, sold money-losing operations and diversified its engineering and construction business, which has benefited of late from a national resurgence of manufacturing activity.