Capital Spending Helps Fluor Double Profit in ’88

Benefiting from a resurgence in capital spending by several key industries, Fluor Corp. on Tuesday reported profits of $56.4 million for its 1988 fiscal year, more than double the $26.6 million posted in 1987.

The Irvine-based engineering and construction firm reported revenue of $5.1 billion for the fiscal year ended Oct. 31, up 31% from $3.9 billion in fiscal 1987.

Fourth-quarter earnings were $23.6 million this year. The company posted earnings of $145 million in the fourth quarter of fiscal 1987, but the figure included a one-time gain of $114 million and a $68-million income tax benefit.

Revenue for the fourth quarter of fiscal 1988 was $1.6 billion, up 33% from $1.2 billion for the same quarter a year ago.

David S. Tappan Jr., Fluor’s chairman and chief executive officer, said this year’s higher earnings reflect “significantly improved results” at Fluor Daniel, the company’s primary engineering and construction unit.

Tappan said new engineering and construction orders rose 47% this year to $6 billion. The backlog of orders at year-end stood at $6.7 billion, up 43% from a year ago.

Tappan said that Fluor Daniel’s work backlog is well diversified among the industrial, hydrocarbon, power, process and government sectors and nearly 25% of the new work put into backlog this year came from outside the United States.

In addition, he said, the company’s investments in coal and lead mining contributed to earnings.

According to analysts, Fluor is enjoying the benefits of increased capital spending in areas in which Fluor is active, such as the construction of pulp and paper plants and high-technology chemical plants and the refurbishing of oil and gas refineries.

“Any way you slice it, orders are strong, profitability is springing back and the outlook remains the best it has been in years,” said Mark Altman, an analyst for Paine Webber in New York.