Firms Cope with Headwinds As They Aim for Better in 2015
Some large, publicly owned firms reported good news in their recent third-quarter results, but staff and cost cuts are also a part of the picture.
Canada-based SNC-Lavalin announced on Nov. 6 much improved quarter revenue and earnings results from the same period in 2013, reporting a $61-million profit compared to a $64- million loss. But CEO Robert Card also said the firm would cut about 9% of its 45,000 global staff in the next 18 months, at an estimated cost of about $177 million. Most cuts would be outside Canada, the firm said. Canadian media also reported on Nov. 8 the firm's loss in a competitive rebid of a multi-year contract, possibly worth up to $22 billion, to manage about 4,000 federal buildings in Canada.
KBR also reported an earnings reversal compared to last year. Stuart Bradie, a former WorleyParsons executive named CEO in June, said the company gained $24 million from settling a tax dispute with its former parent Halliburton, but it still faced an $18-million earnings hit from a "welding issue" on a hydrocarbons project and ongoing litigation on Iraq military contracts. "While the recent decline in oil prices may present challenges … low natural-gas prices continue to result in good engineering, procurement and construction prospects," Bradie said. The firm is slated to complete an operational review in the fourth quarter.
CH2M Hill is set to take an $85-million charge related to a $170-million cost overrun on an LNG project it is building in Australia, where it teamed with local firm UGL, says the Sydney Morning Herald. The firms are in talks with clients to resolve issues and complete the project. Fluor posted strong results, citing recent wins for oil-and-gas projects such as a huge ethane cracker in Louisiana, but Baird analyst Andrew Wittman noted "mining and government headwinds" for the firm through the first half of 2015.
Meanwhile, analyst Michael Dudas of Sterne Agee says improvements next year in U.S. civil and industrial markets will benefit operating margin and backlog growth for Granite Construction.
