There have been few large contract awards signed so far in 2011, dampening financial results for publicly owned engineering and construction firms. At a June 2 Credit Suisse-sponsored briefing in Manhattan, E&C executives told an audience of Wall Street analysts and investors that, despite disappointing first-half results, they are optimistic the tide will turn later this year.

“Investor sentiment remains horrible, and we get why,” said Jamie L. Cook, a Credit Suisse managing director, at the engineering and construction sector briefing. “In addition to broader macro fears, [first-quarter] awards and [earnings per share] disappointed, and no one believes the 2012 consensus estimates.”

However, Cook contends that, in the second half of this year, significant contract awards in the oil-and-gas and transmission sectors “could surprise on the upside,” a trend that could instill “confidence that 2012 estimates are fine, the stocks are cheap, and the cycle is intact.”

Fluor Corp. Chief Financial Officer Michael Steuert said that company backlog was up, but that new awards were “lumpy.” He noted strength in the global mining sector but said power work was “suffering from a lack of demand growth.” Steuert also saw unevenness in oil-and-gas sector work. “There are large prospects out there,” he said, but the timing is uncertain. While Steuert predicted a record company backlog by the end of 2012 or early 2013, margins would not be equal to “what they were three years ago.”

William Utt, CEO of KBR, was hopeful that the firm's efforts in securing front-end engineering and design (FEED) on oil-and-gas jobs would make up for shrinking revenue from its LOGCAP government-support contract work in the Middle East. But he acknowledged the slowdown in more lucrative engineer-procure-construct work. “We're refilling the FEED bucket, but the construction side is pretty light,” Utt said. He noted that the firm was pursuing five liquefied-natural-gas projects and has opened new offices in Angola, Kazahkstan and Latin America.

John Prosser, chief financial officer at Jacobs Engineering Group Inc., said the firm's markets were “still in recovery” and should improve during 2012. He projected no large-capacity oil-and-gas work in the U.S. and Europe but noted continuing revenue from environmental and operations-related work at facilities and “double-digit” growth in the next 24 months in metals and mining construction.

Prosser said price competition and over-capacity would hold down margins. Observed Cook, “Capacity is already tightening on large electric transmission projects, with many of the smaller players getting [their backlog] filled up and larger contractors going after price increases.”

Executives of The Shaw Group said they expected bookings to pick up in the second half of 2011, including nuclear power work. All of its corporate segments “are busy,” except for energy and chemicals, they say. After a recent trip to China, Chief Operating Officer Gary Graphia said that, despite a pause in nuclear growth in China after Japan's powerplant accident, “we left with the impression that China had no intention of slowing down.”

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