28 Feb 2011 04:02:16
Fluor takes hit on Greater Gabbard
Irving, Texas-based engineering company Fluor has reported a sharp decline in quarterly profit due to charges for the Greater Gabbard offshore wind farm project.
Fluor took a US$180 million charge on the Greater Gabbard wind farm in the fourth quarter after reporting a US$163 million expense in the previous quarter for the same project.
The company stated that its industrial and infrastructure segment was impacted by pre-tax charges totaling US$343 million on the Greater Gabbard offshore wind farm project last year, including an incremental pre-tax charge of US$180 million in the fourth quarter. Overall, the industrial and infrastructure group reported a segment loss of US$170 million, compared with a segment profit of US$140 million in 2009.
The company highlighted that the project is experiencing a number of issues that have substantially increased the estimated cost to complete the project. Cost overruns reflect the impact of the bankruptcy of a major subcontractor, weather-related delays which worsened during the fourth quarter and low wind turbine and subsea cable installation rates which have added substantial costs for additional maritime assets.
Fourth-quarter net profit declined to US$117 million, from US$149 million in the same quarter a year before, Fluor said. Revenue slipped 3.9% to US$5.27 billion.
Greater Gabbard was affected by the bankruptcy of Subocean, which was responsible for installing subsea cabling for giant wind turbines, and the higher costs to replace the contractor, said David Seaton, Fluor's chief executive officer on a conference call with analysts.
Seaton said even though the company experienced substantial challenges on the Greater Gabbard project during 2010, the company is well positioned for growth in 2011.
Consolidated revenue for the year totaled US$20.8 billion, down 5% from $22 billion a year ago. Net earnings attributable to Fluor for 2010 were US$357 million compared with US$685 million in 2009.