Land Sale Allows Fluor to Avert Another Loss

Despite a $40.5-million fiscal third-quarter operating loss, Fluor Corp. managed to eke out a net profit of $8.6 million for the period ended July 31, largely on gains from the sale of its Irvine headquarters building.

The troubled international engineering and construction concern had a gain of $55.7 million from the sale of the office building and 162 acres of land in July. Net income for last year’s third quarter was $1.9 million. Revenue for the third quarter fell to $996.1 million from $1.1 billion a year earlier.

The latest quarter’s operating loss comes on the heels of the worst back-to-back quarters in the company’s 73-year history, resulting in a $72-million loss for the first half of fiscal 1985.

Prolonged Strike Hurt

David S. Tappan Jr., Fluor’s chairman and chief executive, attributed the latest deficit to a slight increase in losses in the engineering and construction group, as well as low commodity prices and a prolonged strike in Fluor’s coal operations.

Profits from oil and gas units were also below second-quarter levels due to lower prices and the sale of Fluor’s interest in certain overseas producing properties.

Fluor drilling services had a sharp drop in profits due primarily to a pretax loss of $6.3 million on the sale of a drilling ship.

But, Tappan said, “The trend in new orders for the past seven quarters indicates that the gradual recovery in (Fluor’s) business is continuing.

“New orders in engineering and construction during the third quarter were $570 million,” he added, and the backlog of orders increased to $5 billion, up 16% from a year ago. Still, the company has embarked on a campaign to sell assets as a way to return to profitability.

Sales of Facilities

During the first nine months of this year, Fluor sold assets totaling $626 million, including facilities worth $506 million in Greenville, S.C.; Sugar Land, Tex., and Irvine. The other $120 million was gained on the sale of operating assets, primarily oil and gas properties in the Gulf of Mexico.

“Our objective is to complete as much of this program as possible in fiscal 1985 to set the stage for attainment of our profitability and growth goals,” said Tappan.

Analysts agreed that Fluor was on track to return to profitability but cautioned that more operating losses would probably result in the fourth quarter.

“I think this probably is their main year of transition,” said Herbert Hart, an energy analyst at the San Francisco investment firm of S. G. Warburg, Rowe & Pitman.