Fluor Reports Sharply Higher Sales, Earnings

Fluor Corp., citing improved profits by its Fluor Daniel engineering and construction unit, reported a strong 31% increase in earnings and a 32% rise in sales for its latest quarter.

Fluor earned $28.2 million for the first quarter ended Jan. 31, compared to $21.6 million for the corresponding quarter a year ago. Revenue rose to $1.8 billion from $1.4 billion a year earlier.

The healthy results didn’t surprise many Wall Street analysts, who have come to expect such strong growth from the Irvine-based engineering and construction firm. Fluor has been steadily recovering from a devastating business depression it suffered between 1982 and 1987 as a result of plummeting oil and mineral prices. At least one analyst said some investors were slightly disappointed that Fluor’s showing for the first quarter of its fiscal 1990 year wasn’t even stronger. In New York Stock Exchange trading, Fluor’s stock closed Thursday at $42 per share, down 87.5 cents.

Alan Dorsey, vice president of Dillon Read & Co. in New York, said he believed the slight drop in the stock price reflected a recognition by some securities analysts that their per-share earnings predictions for Fluor were “a few pennies” too high.

While Dorsey is optimistic about the future of Fluor, he said the company’s short-term results have been adversely affected by a decline in the profits of its lead business and higher costs resulting from an expansion of its construction and engineering division.

But another analyst, Mark Altman of PaineWebber Inc. in New York, said Fluor’s first quarter results were “on target” with most forecasts. He predicted “a good year” for the firm.

Fluor’s business backlog at quarter’s end was $8.7 billion, up 25% from a year ago. Also, the company reported $1.8 billion in new orders during the quarter, a 14% gain from a year ago.

Les G. McCraw, Fluor’s chief executive officer and vice chairman, said: “Growth in net earnings was due to improved profitability by Fluor Daniel, the company’s engineering and construction unit. Higher contract margins and realization of performance-incentive fees more than compensated for planned increases in personnel training and development as well as other expansion-related costs.”

The greatest growth in new orders was in the company’s process and hydrocarbon sectors. Dorsey noted that Fluor is seeing a resurgence of its hydrocarbon business because of plans by the Organization of Petroleum Export Countries to expand and replace oil production facilities in the Middle East. He said the company’s $2.29-billion backlog in hydrocarbon projects, including $300 million in new orders gained in the first quarter, is the largest it has been since 1983.

FLUOR CORP. PERFORMANCE Here are performance figures for Fluor Corp. for the first quarter of fiscal 1990, and the comparable 1989 quarter. (Revenue, net income in millions)

1st Qtr. 1st Qtr. 1989 1990 Revenues $1,420.1 $1,876.2 Net income $21.6 $28.2 Earnings per share 27 cents 35 cents