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Fluor Profit Off 14% on Oil Price Drop, Overseas Woes

May 27, 1999|From Bloomberg News

Fluor Corp., the largest U.S. engineering and construction company, said Wednesday that second-quarter profit before a charge fell 14% as low oil prices and recessions abroad slowed factory and refinery construction.

Fluor's profit from operations fell to $46.9 million, or 62 cents a share, for its quarter ended April 30, from $54.3 million, or 67 cents, a year earlier. Sales fell 5.8% to $3.09 billion from $3.28 billion.

Irvine-based Fluor was expected to earn 63 cents a share, according to analysts surveyed by First Call.

Fluor shares fell 25 cents to close at $37.06 Wednesday on the New York Stock Exchange.

Low oil prices and lingering recessions in Asia and Latin America bit into Fluor revenue from building and upgrading power and chemical plants. Fluor has also been seeking higher-margin jobs, contributing to the revenue drop, spokesman George Palmer said.

In the most recent quarter, Fluor also took a charge of $119.8 million to cut 5,000 jobs, close 15 offices and break the company into four business groups. That restructuring resulted in a net loss of $72.9 million, or 97 cents a share.

The quarter includes a pretax charge of $20 million tied to a provision for a loss at a nickel cobalt project in Australia.

Fluor executives told analysts that the company unexpectedly was paid nearly $20 million from a slowed Indonesian project, according to analyst John McGinty with Credit Suisse First Boston. The disclosure raised concerns about information the company has been reporting, McGinty said.

"The most depressing part is that seems more like the old Fluor than the new. Earnings fall unexpectedly, and they take money out of one spot and transfer it to another," he said.

Lila Churney, Fluor's director of investors relations, said the company had previously disclosed the Indonesian project's delays, and that it was a "helpful coincidence" the payments came in time to offset the loss in Australia.

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