Fluor Rebounds With 4th-Quarter Profits Up 19%

Engineering and construction giant Fluor Corp. said Tuesday that fourth-quarter profits rose 19%, exceeding Wall Street’s expectations and ending a difficult year on a positive note.

The Aliso Viejo-based company, which undertook a large and painful restructuring this spring that involved laying off nearly 5,000 workers and overhauling its far-flung global operations, saw its stock price climb 5.6% Tuesday.

“We’ve kind of seen the bottom and are back on track,” said Ralph Hake, Fluor executive vice president and chief financial officer. “Next year’s going to be a pretty good year.”

The company said earnings in the quarter ended Oct. 31 rose to $75.8 million, or $1 per share, from $63.8 million, or 84 cents per share, a year earlier. Revenue declined 12% to $2.8 billion from $3.3 billion a year ago.

Fluor is Orange County’s oldest publicly traded company and one of seven on the Fortune 500. It is the region’s third largest in terms of annual revenue and fifth largest in market value, worth $3 billion at the close of trading Tueday.

Fluor’s willingness to slash costs--which saved an estimated $160 million last year--and focus on higher-margin jobs has won the company support in the analyst community.

“It looks like they’re coming off the trough,” said Salomon Smith Barney analyst Tobias Levkovich, who has a “buy” recommendation on Fluor. “Things certainly do appear better.”

The company also has become more competitive and improved its balance sheet, shaving its short-term debt by 43% over the past year.

“It looks to me like they’re more disciplined and have pulled it together,” said Mary Safrai, an analyst at Carl H. Pforzheimer in New York City.

Fluor’s fiscal first quarter has already gotten off to a seemingly good start. The company said Tuesday that it has landed two major projects, a power plant in Puerto Rico and the upgrade of the London Underground’s telecommunication system, that are potentially worth a total of $750 million in revenue.

“We believe we’ve got some wind at our back with regards to the level of earnings and backlog,” said Hake, who hopes that annual profits will climb nearly 10% this year. Part of the reason for his optimism is growing global demand for new power and chemical plants and major highways, projects in which Fluor specializes.

Fluor landed $1.86 billion worth of new work in the quarter, a 2% drop from a year ago, but several hundred million dollars higher than many had expected, Hake said. Its backlog--the amount of work awarded, but not yet begun--fell 28%, to $9.1 billion.

The fourth-quarter results included a one-time gain of $19.3 million, the amount that Fluor overestimated as the cost of its restructuring. The company initially took a $136.5 million charge in its 1999 second quarter.

Excluding the gain, Fluor earned $56.5 million, or 74 cents a share. Wall Street was expecting 70 cents a share, according to a Nelson’s survey.

The company’s stock price has rebounded sharply since this spring, when Fluor announced it would lay off 5,000 workers and close 15 offices amid a sales and profit decline. So far, the company has let go 4,700 workers, and closed 13 offices, but plans to meet its initial targets. Fluor shares rose $2.13 cents Tuesday, to $39.63, up 51% since hitting a 52-week low of $26.19 in late March.

The restructuring was launched by Chief Exeucitve Philip Carroll Jr., a former Shell Oil Co. chairman and CEO who took those same positions at Fluor in July 1998.

For the year, Fluor’s profit fell 54%, to $104.2 million, or $1.38 per share, from $235.3 million, or $2.99 per share the previous year. Revenue slipped 8%, to $12.4 billion, from $13.5 billion.

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Engineering A Turnaround

Shares of engineering and construction services giant Fluor Corp. have surged up 51% since hitting a 52-week low of $26.19 in late March. It closed Tuesday at $39.63.

Closing Stock Prices;

JAN: $42.50

NOV: $39.63

Net Sales (millions):

‘95: $9,301.38

‘99: $12,417.40

Net Income (millions):

‘95: $231.77

‘99: $104.20

Sources: Fluor, Bloomberg News