Fluor Corp., the largest publicly traded U.S. engineering and construction services company, said Tuesday that its second-quarter profit rose nearly 5% from a year earlier, despite a 67% drop-off in its business that designs and constructs power plants.
For the quarter ended June 30, the Aliso Viejo-based firm posted earnings of $45 million, or 56 cents a share, compared with $43 million, or 54 cents, in the same period a year earlier. The latest earnings beat analysts' consensus estimate by a penny, thanks to the sale of an equipment dealership that added about $2 million, or 2 cents a share.
Revenue fell by 11.5% to $2.24 billion from $2.54 billion.
Fluor's power business revenue fell to $193.1 million from $591.7 million a year earlier. That unit accounted for 8.6% of the company's overall revenue in the quarter -- down from nearly 24% a year earlier.
Fluor's oil and gas business revenue also declined 25.5% to $639 million.
Those declines were largely offset by revenue increases at units that serve industrial customers and government agencies, as well as the segment that provides engineering, construction support and maintenance work for customers worldwide.
"Fluor has been able to generate bookings and revenue and profits away from the power business ... as that business has dried up," said Michael Dudas, an analyst with Bear, Stearns & Co.
Given the change in the company's business mix, Alan Boeckmann, Fluor's chairman and chief executive, narrowed the full-year earnings range to $2.15 to $2.25 a share, from the previous guidance of $2.13 to $2.35.
Fluor could get a boost if it wins a major contract for work in postwar Iraq. The company plans to team up with Amec, Britain's largest engineering and construction firm, to bid in mid-August for a long-term contract to rebuild the Iraqi oil industry.
This year Fluor lost out to Bechtel Group Inc. of San Francisco for a contract, valued at as much as $900 million, to rebuild Iraq's civil infrastructure, including telecommunications and health-care facilities. Fluor was awarded a smaller contract, valued at as much as $100 million, to provide support services to the U.S. Central Command.
"It's too early to say if Fluor has won or lost" in the Iraq bidding, Dudas said. "There's the potential that they'll get something in the next 12 to 18 months. But it's not going to be a make-or-break situation for them."
Fluor's earnings were released after the close of markets. The company's shares gained 68 cents Tuesday to close at $35.45 on the New York Stock Exchange. Its stock is up 21% for the year.