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Fluor Open to Selling Its Crane Division

CALIFORNIA / News and Insight on Business in the
Golden State

December 16, 1997|JAMES S. GRANELLI | TIMES STAFF WRITER

Fluor Corp. said Monday that it will consider selling its worldwide supplier of construction cranes as part of an effort to cut costs and focus on its basic engineering and construction business.

The Irvine-based company, which revealed last week that its chairman, Leslie McGraw, is ailing and will retire early, said it will decide over the next four months whether to sell American Equipment Co.

Fluor's profit and stock price have plummeted this year. The company started a massive cost-cutting program last spring to retrench from the ambitious expansion it had launched in the early 1990s.

A major component in its retrenchment is the sale of nonessential and unprofitable operations. Though American Equipment "has proven an excellent source of income," Fluor said, it isn't strategically essential to Fluor's engineering and construction work.

Analysts said the possible sale of American Equipment indicates Fluor is stepping up restructuring efforts that were perceived as going too slowly.

"This is not business as usual," said Robert Toomey, an industry analyst in the Seattle office of Piper Jaffray Inc. "The pace and the urgency have changed. That's what they're trying to convey to the market."

Fluor's stock, which had dropped 50% since February, gained $1.25 a share Monday to close at $38.25 in New York Stock Exchange trading.

Fluor said it intends to use the proceeds from any sale of American Equipment to repurchase company stock, provided the price remains low. Wall Street observers predict the unit, with 900 employees, could fetch more than $450 million.

The unit technically is a subsidiary of Fluor's main operating company, Fluor Daniel. Even if a sale goes through, Fluor Daniel will continue renting equipment from American Equipment and other providers, Fluor spokeswoman Lisa Boyette said.

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