Fluor Profits Off 27% in 4th Quarter
Fluor Corp. on Thursday posted lower profits and revenue for the fiscal fourth quarter, a reflection of cost cutting and being more selective in taking on new projects.
The Irvine-based engineering and construction service firm said profit for the three months ending Oct. 31 fell 27% to $63.8 million, or 84 cents a share, from $88 million, or $1.06 a share, a year earlier. Revenue dropped 17% to $3.3 billion from $4 billion.
The company’s profit for the final period beat industry analysts’ estimates by 82 cents a share. But the improvement came largely from cost-cutting measures and failed to cheer investors. The stock fell 38 cents to $43.13 in light trading on the New York Stock Exchange.
Despite the final quarter downturn, Fluor reported that net income for the fiscal year climbed 61% to $235.3 million, or $2.97 per share, from $146.2 million, or $1.75 per share, for the previous year. Revenue was off 5.6% to $13.5 billion from $14.3 billion.
At the Fluor Daniel unit, a designer and builder of power plants and oil refineries that generates about 90% of Fluor’s total revenue, operating profits in the fourth quarter dropped 24% to $66 million from $87 million a year earlier.
Fluor has said it expects Fluor Daniel’s earnings and revenue to be constrained by the Asian economic downturn, its own cost-cutting measures and more selective bidding on projects.
Last year, Fluor Daniel said that an ambitious expansion drive had caused it to lose control of critical bidding processes, which resulted in winning some contracts that actually cost it money.
Company officials say they do not expect Fluor Daniel earnings to increase during fiscal 1999.
The pace of new awards slowed to $1.9 million for the quarter, down 29%, and to $10 billion for the year, off 17%.
In contrast to Fluor Daniel’s performance, the company’s A.T. Massey low-sulfur coal mining subsidiary was one of the top five coal operations in the country last year and reported higher operating profits for both the fourth quarter and the year.
Fluor officials say they expect Massey’s earnings to continue increasing in the new fiscal year. Massey’s operating earnings jumped 11% for the quarter, to $52 million, and rose 12% for the full year, to $173 million.
While Fluor Daniel is facing a potential slowdown in new business across a variety of geographic regions and industries, its diversified business mix should provide the balance needed to cope, said Phillip Carroll, who has been Fluor chairman and chief executive since July.
But if global economic conditions worsen beyond the company’s expectations, Carroll said, Fluor Daniel “is prepared to take cost-cutting actions and other measures.”
