Fluor Rebounds as 4th-Quarter Profit Rises 19%

Engineering and construction giant Fluor Corp. said Tuesday that fourth-quarter profit 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 last spring that involved laying off 5,000 workers and overhauling its far-flung global operations, saw its stock price climb 5.6% on Tuesday.

“We’ve kind of seen the bottom and are back on track,” said Ralph Hake, Fluor executive vice president and chief financial officer.

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 $2.9 billion from $3.3 billion a year ago.

Fluor’s willingness to slash costs--which saved an estimated $160 million last year--and focus on higher-margin jobs have 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.

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

Fluor’s fiscal first quarter seems to have gotten off to a 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 telecommunications system, that are potentially worth a total of $750 million.

“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.

The fourth-quarter results included a one-time gain of $19.3 million, the amount that Fluor overestimated in 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 last 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.

On the New York Stock Exchange, Fluor shares rose $2.13 Tuesday, to $39.63, up 51% since hitting a 52-week low of $26.19 in late March.

For the year, Fluor’s profit fell 56%, to $104.2 million, or $1.37 per share, from $235.3 million, or $2.97 per share the previous year. Revenue slipped 8%, to $12.4 billion, from $13.5 billion.