ConDig (05-May-17). Profit at engineering and construction group Fluor Corp (FLR) fell by more than two thirds in the first quarter of this year as charges related to cost increases and narrower margins offset a rise in revenue.

The Irving, Texas-based company booked net earnings of $61 million for the quarter ended March 31, down from $104 million in the same period a year earlier.

Fluor said the main driver behind the drop was the progression of current projects from higher margin engineering activities to lower margin construction projects.

It also comes as Fluor reported a pre-tax charge of about $30 million for cost increases on projects in the industrial, infrastructure and power division, along with a pre-tax foreign exchange expense due to a strengthening Mexican peso.

First quarter revenue was $4.8 billion, up slightly on the $4.4 billion recorded in the prior year, while the consolidated ending backlog was $41.6 billion compared with $46.0 billion in the first quarter of last year.

The company said it is revising its full-year earnings to a range of $2.25 to $2.75 per diluted share from a previous range of $2.75 to $3.25 per diluted share because of the lower than expected first quarter results and the secondarily risk around the pace of new awards and revenue for the next few quarters.

“We continue to experience headwinds as it relates to the timing of client capital decisions as we come off of one of the lowest commodity cycles this industry has seen in recent history,” said David Seaton, Fluor chairman and chief executive officer.

“However, we still see the same prospects and the ability for the trend to reverse as we move into the second half of 2017 and beyond.”

This week, a Fluor Corp and Balfour Balfour Beatty Infrastructure Inc. joint venture won a $625 million contract for the revamp of the Southern Gateway, along Interstate I-35E and US 67 in Dallas, Texas.