UPDATE 3-Fluor profit beats estimates, shares rise

Thu Aug 4, 2011 7:17pm EDT

* Q2 EPS 94 cents vs 81 cents expected by Wall St analysts

* Q2 revenue rises 17 pct to $6.03 bln

* Backlog up 8 pct at $40.3 bln -- about 80 pct outside US

* Shares up 7 pct, reversing much of Thursday's loss (Adds CEO comments, byline)

By Braden Reddall

SAN FRANCISCO, Aug 4 (Reuters) - Fluor Corp (FLR.N), the largest publicly traded U.S. engineering company, posted unexpected second-quarter profit growth and said its backlog of work surged to a new record, lifting its stock by 7 percent.

The backlog grew $3.1 billion in the quarter to $40.3 billion, an increase of a third in the past year driven by work in mining and petrochemicals. About 80 percent of the total backlog was for projects outside the United States.

On a call to discuss the results on Thursday, Chief Executive David Seaton told analysts he saw plenty of U.S. projects that could enter the backlog once they got permits or a final investment decision. "If the U.S. returns at all, it's upside for us."

Oil and gas margins would continue "rattling along the bottom" until early 2012, he said, with more than two dozen projects on that side of the business in design phase which could become contracts over the next six or seven quarters.

Second-quarter net profit rose to $166 million, or 94 cents per share, from $157 million, or 87 cents per share, a year earlier. Analysts, on average, expected 81 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 17 percent to $6.03 billion, above the average analyst estimate of $5.77 billion.

Mining has made up a growing share of Fluor's work in the past year, which has led to lower profit margins because of the nature of mining projects.

Fluor booked $2.7 billion for work awarded to its joint venture on Port Hedland Inner Harbour in Western Australia, as part of miner BHP Billiton's (BLT.L) (BHP.AX) expansion there.

Also last quarter, Fluor won a contract for an "undisclosed value" related to the al-Jubail chemical complex in Saudi Arabia, which will be owned and operated by a joint venture of Dow Chemical Co (DOW.N) and Saudi Aramco [SDABO.UL].

The Irving, Texas-based company nudged up the lower end of its 2011 earnings outlook by 10 cents, increasing it to $3.10 to $3.40 per share, while analysts had been looking for $3.32.

Nearest rival KBR Inc (KBR.N) raised its full-year profit outlook by about a quarter last week. [ID:nN1E76Q1ZO]

"There have been mixed results in the space," said Richard Paget, analyst at WJB Capital Group, citing McDermott International Inc's (MDR.N) 27 percent share price drop on Thursday following its quarterly numbers. "(But Fluor's) stellar bookings show large capital projects are still moving forward - especially in the mining and energy sectors."

Fluor shares rose 7 percent to $58.45 in after-hours trade on Thursday, reversing much of a 9.5 percent loss in regular trading. (Reporting by Braden Reddall; Editing by Richard Chang, Matthew Lewis and Tim Dobbyn)