Flour (FLR) to Support PKN ORLEN's Olefins Expansion Project
Fluor Corporation FLR has received project management contractor services or PMC+ contract from PKN ORLEN. The company will support the expansion of PKN ORLEN’s olefins complex in Plock, Poland.
PKN ORLEN will receive technical consulting and project management services from Fluor. Notably, this Olefins Expansion Project will benefit the Polish economy and facilitate the country’s transition to a net exporter of petrochemicals. Notably, the project is a key part of PKN ORLEN’s Petrochemicals Development Program.
The company will book the reimbursable services contract value in fourth-quarter 2019, under the Energy & Chemicals business segment. This project is expected to begin in December 2019.
Fluor boasts an impressive record of contract wins. Management is optimistic about the continuation of this trend in the upcoming days, which is will likely drive the top line.
The Energy & Chemicals Business segment, which contributes 41% to the company’s total revenues, reported a segment profit of $85 million in the third-quarter 2019, increased 70% from the year-ago period’s levels New awards in the third quarter 2019 totaled $256 million for the segment. Third-quarter ending backlog amounted to $13.7 billion compared with $11.4 billion in the year-ago quarter.
At the end of the third quarter, Fluor’s consolidated backlog was $30.3 billion that rose from $30 billion in the year-ago quarter.
Fluor’s Energy & Chemicals business, which has been recording dismal results over the last few quarters, is expected to benefit from this contract win. Within the Energy & Chemicals unit, revenues fell 23% in the first nine months of 2019 compared with the year-ago period’s level. The downside was primarily caused by reduced volume of project execution activities along with lower volume of broad-based new awards in 2018 and 2019.
Also, shares of the company have declined 48.3% year to date against the Zacks Engineering - R And D Services industry’s rise of 22.2%.
Nevertheless, continuous contract wins, strong end-market prospects, solid backlog level and a good business portfolio mix are expected to drive growth.
Zacks Rank & Key Picks
Currently, Fluor currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the same industry are Gates Industrial Corporation plc GTES, Quanta Services, Inc PWR and AECOM ACM. Gates Industrial and Quanta Services sports a Zack Rank #1, whereas AECOM carries a Zacks Rank #2 (Buy).
Gates Industrial surpassed estimates in two of the trailing four quarters, the average being 12.1%.
Quanta Services’ current year earnings are expected to rise 15.3%.
AECOM has three-five year expected earnings per share growth rate of 12.4%.
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