About Fluor Corp.
From the ground up, Fluor Corporation is one of the world's largest international design, engineering, and contracting firms. It provides engineering, procurement, construction, maintenance (EPCM), as well as project management services for a variety of industrial sectors around the world. Its myriad portfolio includes manufacturing plants, refineries, – more... pharmaceutical facilities, health care buildings, power plants, and telecommunications and transportation infrastructure. Oil and gas, industrial, and infrastructure projects account for more than half of Fluor's sales. The group also provides operations and maintenance services for its projects, as well as administrative and support services to the US government.
The company is structured into five primary segments by sector: oil and gas, industrial and infrastructure, power, global services, and government. A separate group, Fluor Constructors International, provides unionized construction and construction services in the US and Canada. Fluor's oil and gas segment provides design, engineering, and construction and project management services to markets including upstream oil and gas producers, refiners, petrochemical manufacturers, and producers of specialty and fine chemicals. The unit also provides oversight of other contractors and procurement of labor, equipment, and materials.
Fluor's oil and gas segment has traditionally been the primary driver for growth in the company, generally benefitting from increased global demand for oil. However, falling oil prices and the downturn in the economy has hurt the segment, especially related to its downstream operations. No longer Fluor's largest segment as of 2011, oil and gas saw its revenues slip by about half in 2010. Increased construction activities led to modest growth in 2011, but profitability declined that year.
Even still, Flour continues to look for new opportunities to grow its oil and gas business. In 2011 the company made a niche acquisition when it bought Goar, Allison & Associates, a company that specializes in sulfur technologies for upstream gas plants and refineries.
The rapidly growing industrial and infrastructure segment -- which overtook oil and gas as the largest segment in 2011 -- provides design, engineering, procurement, and construction services for pharmaceutical and biotechnology facilities, commercial and institutional buildings, and mining, telecommunications, wind power, and transportation projects. The unit also participates in public/private partnerships to oversee financing and management of roadway and railway projects. One ongoing significant project is the world's largest offshore wind farm development off the coast of the UK. The project is expected to help produce 25 gigawatts of wind energy by 2020.
Fluor's government services segment, another growing division, offers project management services primarily to the US Departments of Energy, Defense, and Homeland Security. It provides environmental restoration, engineering and construction, and operations and maintenance services for two former nuclear weapons complexes that are now DOE cleanup sites: the Savannah River site in South Carolina and the Hanford Environmental Management Project in Richland, Washington. Subsidiary Del-Jen provides military base operations and maintenance services and other logistical and infrastructure services around the world. Fluor's largest long-term job, a multi-billion dollar, multiyear project, is its LOGCAP IV contract to provide services to the US military, primarily in Afghanistan. However, defense spending is expected to decline, which could hurt Fluor's business in the future.
Fluor jumped into the growing outsourcing services market with its global services segment, which provides operations and maintenance support, temporary staffing (through TRS Staffing Solutions), and asset management. Fluor also provides construction equipment, tools, and fleet outsourcing for construction projects and plant sites worldwide through subsidiary American Equipment Company (AMECO).
The group's smallest segment is its power segment, through which it provides EPCM and other services to the gas fueled, solid fuels, renewables, environmental compliance, nuclear, and power services markets. Fluor added to the segment in 2011 with the acquisition of a majority stake in NuScale Power, a designer of small modular nuclear reactors.
Overall, the engineering and construction industry faces challenges with heavy competition and overcapacity. Due to its great size, Fluor is well-positioned to survive in this climate, as it is active in diverse sectors as well as experienced in carrying out projects in difficult locations such as the Middle East. The company also boasts a strong balance sheet, which makes it ready to take advantage of strategic acquisition opportunities. Fluor's revenues grew by 12% to a record $23.4 billion in 2011, while its net income rose some 66% to $593.7 million. The growth was led by its mining and metals operations of its industrial and infrastructure segment. – less
