ConDig (21-Feb-18). Profit at engineering and construction firm Fluor Corp crumbled 14% in the fourth quarter as an uptick in revenue was offset by a rise in costs.
The Irving, Texas-based company posted net earnings of $60.3 million for the quarter ended December 31 2017 compared with $70.5 million in the same period a year earlier.
It comes despite revenue rising to $5 billion from $4.98 billion in the fourth quarter of 2016.
The dent in profit was largely driven by a tax charge of $45 million, or $0.32 per diluted share, for estimated cost increases on a downstream project and a power project.
For the year 2017, the company posted net earnings of $191.4 million, down from $281.4 million in 2016 as revenue dipped to $19.5 billion from $19 billion a year earlier.
The company said it was establishing its initial earning per share guidance for this year at a range of $3.10 to $3.50 per diluted share. This includes an increase in oil and gas, mining and infrastructure opportunities, and new revenue recognition standard and current interpretation of recently enacted tax reform legislation in the US.
“Based on our current interpretation and analysis, we expect the benefit of the new revenue recognition standard and US tax reform will be approximately $0.75 to $0.95 per diluted share, a majority of which can be attributed to the new revenue recognition standard,” said Flour.
The company secured $12.6 billion of new work in 2017, ending the year with a backlog of $31 billion. The new awards included $5.4 billion in its energy, chemicals and mining division, $2.6 billion in industrial, infrastructure and power, $2.6 billion in government and $2 billion in diversified services.
New contract awards in the fourth quarter totaled $483 million, including a contract for the Greenline light-rail extension project in Massachusetts. The year-end backlog was $7.7 billion compared with $15.1 billion a year ago, with the drop reflecting the removal of two nuclear power plant projects.
“Over the past year, we continued strengthening our integrated solutions offering, maintaining a cost-efficient organization and developing predictive analytics and other tools to enhance our project execution capability,” said David Seaton, Fluor chairman and chief executive officer.
“As we go into 2018, these actions should serve us well with clients across the diverse markets we serve expressing increased optimism in pursuing advantaged projects.”
In August, Fluor Corp and Lane Construction Corp were chosen for the preliminary development of the Texas Bullet Train, a proposed 240-mile high-speed passenger rail line connecting Dallas/Fort Worth and Houston.