(By Salman) Foster Wheeler AG (NASDAQ: FWLT) is scheduled to release its fourth
quarter 2009 earnings before the market open on Thursday, February 25,
2010. Analysts, on average, expect the company to report earnings of 64
cents per share on revenue of $1.24 billion. For the fourth quarter of
the previous fiscal, the company reported earnings of $1.03 per share
on revenue of $1.64 billion.
Foster Wheeler AG, together with its subsidiaries, provides
construction and engineering services to the oil and gas, oil refining,
chemical/petrochemical, pharmaceutical, environmental, power
generation, and power plant operation and maintenance industries
worldwide. It operates through two groups, Global Engineering and
Construction Group (Global E&C Group), and Global Power Group.
Like other infrastructure-related companies, the company has been
negatively impacted by the worst recession in decades. The global
economic slowdown eroded company's profit and topline as downturn
brought a screeching halt to refinery expansion projects. In November,
the Geneva, Switzerland-based company reported that its third quarter
net income declined to 30% to $90 million, or $0.71 per share, from
$127.92 million, or $0.88 per share, in the year-ago quarter. On an
adjusted basis, net income was $91.74 million or $0.72 per share, down
from $129.64 million or $0.89 per share last year. Operating revenues
for the quarter declined to $1.22 billion from $1.72 billion last year.
Analysts, on average, expected the company to report earnings of $0.63
per share on revenue of $1.29 billion.
In December, Foster Wheeler relocated its operating headquarters fom
Perryville, New Jersey to Geneva, Switzerland. The engineering and
construction contractor and power equipment supplier will remain
domiciled in Switzerland. "Relocation will significantly increase
management effectiveness by having our senior executive team in much
closer proximity to our markets, clients and operations," said Raymond
Milchovich, chairman and chief executive officer of Foster Wheeler AG.
The construction and engineering services provider also announced a
senior leadership succession plan. The firm also named its current
President of Foster Wheeler USA Robert Flexon as chief executive
officer of Foster Wheeler USA, effective June 1, 2010.
Recently, Foster Wheeler AG's subsidiary, Global Engineering and
Construction Group has signed a Joint Venture Agreement to form a
jointly owned Saudi Arabian entity with A. Al-Saihati, A. Fattani and
O. Al-Othman Consulting Engineering Company (SOFCON) in the Kingdom of
Saudi Arabia.
The company is quite optimistic on Asia and South America. "We are
seeing activity in a number of sectors, Mark Garvey, chief operating
officer of Foster Wheeler Group Asia said in a statement. "The entire
Asia region is showing signs of life, life with legs to it. We are very
bullish (on Asia), and in contrast to Europe and the U.S., we also see
South America coming on with commodity-based activity. There are
reasons for optimism."
Investors are likely to focus on backlog and sales growth for any sign of improvement.
The company's stock currently trades at a forward P/E (fye 26-Dec-10)
of 10.59 and PEG (5 yr expected) of 0.74. In terms of stock
performance, Foster Wheeler shares have gained nearly 36% over the past
year.
Full Disclosure: None.
