UPDATE 3-Oil, gas work boosts Fluor earnings above estimates

Thu Aug 1, 2013 3:04pm EDT

* Second-quarter adjusted profit ahead of estimates
    * Mining sector, one-off charge weigh down 2013 outlook
    * Nuclear venture teams up with Rolls-Royce
    * Shares up 4 pct, hit 2-month highs


    By Braden Reddall
    Aug 1 (Reuters) - Fluor Corp posted on Thursday a
higher-than-expected adjusted profit on growth in oil and gas
work, for which prospects were strong, yet the U.S. engineering
company trimmed its 2013 outlook partly due to mining sector
weakness.
    Shares of Fluor, the largest publicly traded U.S.
engineering company, rose more than 4 percent to $65.15, hitting
their highest levels for two months.
    Fluor-backed nuclear venture NuScale separately announced
that Britain's Rolls-Royce had joined its effort to get a
U.S. Department of Energy grant. Babcock & Wilcox 
secured such a grant last year. 
    In the second quarter, Fluor said major oil and gas earners
included a project in Russia and design work for a chemicals
plant in Louisiana being built by South Africa's Sasol.
 
    Fluor's project backlog fell by $500 million to $37 billion
at the end of the second quarter. Despite the generally weaker
mining outlook, Fluor said this week it had been awarded a $2.9
billion contract from Freeport-McMoRan Copper & Gold for
an expansion of the Cerro Verde mine in Peru.
    "Most of the miners are taking a deep breath," Fluor Chief
Executive David Seaton said on a conference call. "The Cerro
Verde award shows there are people ready to pull the trigger and
spend money on things that make sense."
    Fluor's second-quarter net profit was $161 million, or 98
cents per share, flat against $161 million, or 95 cents per
share, in the year-earlier period. Growth was offset by a $17
million charge for a court ruling on claims over work on the
U.S. embassy in Haiti.
    Excluding that, the Irving, Texas-based company made $1.05
per share, above the $1.01 expected on average by analysts,
according to Thomson Reuters I/B/E/S. 
    As a result of the charge and the mining outlook, Fluor cut
the upper end of its full-year profit per share forecast by 15
cents per share, bringing the range down to between $3.85 and
$4.20. Analysts had been expecting $4.14 per share, on average.
    Nearest competitor Chicago Bridge & Iron on Tuesday
posted a higher-than-expected profit, but revised lower its
anticipated new orders for this year. 
    Rival KBR Inc posted higher-than-expected earnings
on improved profit margins. 
    As for North American liquefied natural gas export projects,
which KBR and CB&I are both targeting, Fluor said it was bidding
for Kitimat in British Columbia and Cameron in Louisiana.
    "These projects are large and in some cases nobody is going
to get the whole thing," Seaton said. "When people talk about an
$8 to $10 billion LNG plant, I don't think anybody is going to
get $10 billion of any of them."
    Seaton also said customers' diligence on making such huge
investments would drive scheduling more than regulation.
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