Fluor Corporation (FLR - Free Report) has been selected as a project management consultant by Advanced Global Investment Company (AGIC) to serve the latter’s new propane dehydrogenation, polypropylene and utilities, and offsites complex, located in Jubail Industrial City, Saudi Arabia.
Per the deal, the Energy & Chemicals business will provide services for the front-end engineering design or FEED, detailed engineering, procurement and construction (EPC) phases of the project. The company will perform its section of work in its office situated in Farnborough, United Kingdom and Al Khobar, Saudi Arabia, supported by the global experts’ network. Notably, the company booked the undisclosed contract value in first-quarter 2020.
Post the project’s completion, the complex will manufacture 843,000 tons per year of propylene and 800,000 tons of polypropylene. The propylene and polypropylene will be further used for the production of specialty polymers for face masks, automotive, pipes, food packaging, and textiles industries.
Through this contract, Fluor will help AGIC and the Kingdom of Saudi Arabia to meet the growing demand for polymers across the world. Also, Fluor will help the Kingdom of Saudi Arabia to support their efforts to diversify economy and become one of the world’s leading global producers of polypropylene.
It has been providing EPC solutions for more than 40 years in China. Earlier, the company was selected as a project management consultant from Bharat Petroleum Corporation Limited to provide FEED services to the latter’s Polyols Petrochemicals Project.
Energy & Chemicals Business to Drive Growth
Fluor, being an industry leader in nuclear remediation at government facilities throughout the United States, is expected to benefit from rising demand for energy across the globe. Relative stability in commodity prices is expected to boost investments in downstream and petrochemicals.
The Energy & Chemicals Business segment — which contributed nearly 41% to the company’s total revenues — had reported a profit of $84.9 million in third-quarter 2019, up 69.1% from a year ago. Quarter-end backlog also grew from the year-ago period. Management is optimistic about the continuation of this trend of winning contracts in the upcoming days, which will likely drive its top line.
Per the preliminary financial results for the fourth quarter and 2019, new awards came in at $12.6 billion. Of these awards, $3.7 billion was recorded in the Energy & Chemicals unit, $1.9 billion in the Mining & Industrial segment, $2.6 billion in the Infrastructure & Power business, $2.2 billion in the Government unit, and $2.2 billion in the Diversified Services segment. Consolidated backlog for 2019 is projected to be $32.7 billion.
The company has been posting dismal results over the last few quarters due to unimpressive segmental performance. Nonetheless, the stock has gained 20.1% in the past month compared with the Zacks Engineering - R And D Services industry’s 0.4% rally. Continuous contract wins, strong end-market prospects, solid backlog level and a good business portfolio mix are expected to drive its growth in the future.
Fluor — which shares space with Gates Industrial Corporation plc (GTES - Free Report) , Quanta Services, Inc. (PWR - Free Report) and AECOM (ACM - Free Report) in the industry — currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>