Fluor’s 3rd-Quarter Profit Fails to Meet Forecasts
Engineering and coal giant Fluor Corp., which has been struggling with difficult conditions in both markets, said Wednesday that its net earnings fell 20% in its third quarter, missing Wall Street expectations, but it was on track to meet its earnings target for the year.
Net earnings for the quarter ended July 31 were $50.2 million, or 66 cents per share, compared with $62.4 million, or 81 cents per share, for the same quarter a year ago. Wall Street analysts polled by First Call/Thomson Financial expected earnings per share of 67 cents for this year’s quarter.
Revenue was also down--at $3.1 billion, compared with $3.5 billion in its third quarter of last year--with a more than $1-billion drop in engineering and construction awards and disappointing results in the coal sector.
Fluor shares fell 6 cents to close at $41.75 on the New York Stock Exchange.
New engineering and construction awards for the quarter were $1.6 billion, compared with $2.7 billion a year ago. Backlog at the end of its third quarter was $9.1 billion, compared with $13.7 billion in 1998, Fluor said, without explanation.
A.T. Massey, Fluor’s low-sulfur coal business, posted operating profit of $34 million, down from $44 million in 1998. The decline was primarily due to continuing difficult market conditions that resulted in lower realized prices and a less favorable sales mix compared with a year ago.
However, Chairman and Chief Executive Philip Carroll Jr. said external market conditions for several of the company’s businesses are continuing to improve.
“Our third-quarter results are consistent with the company’s expectation and we remain on track for achieving our annual earnings target of $2.65 per share, excluding the special provision which was recorded in the second quarter of 1999.” Analysts are calling for annual earnings of $2.66 per share.
Carroll said strengthening oil prices and increased client confidence in the economic stability of Asia and Latin America are creating increased optimism for new awards and backlog during fiscal year 2000.
Fluor said implementation of the company’s cost-reduction program to lower overhead expenses was estimated to be about 75% to 80% complete, including the closure of 11 offices and a reduction of 3,300 personnel.
The company, based in Aliso Viejo, continues on track to reach its goal of $160 million in gross cost reductions for the coming year. In addition, based on the current improving external environment, the company now expects annual earnings in 2000 to be at least level with 1999 or to grow modestly.
Fluor, with 1998 revenue of $13.5 billion, conducts worldwide business in the fields of engineering, procurement and construction, global services and coal production.
