(FLR) Fluor Earns Design Contract From Dow for Propane Project

Fluor Corporation (FLR) received a basic engineering and design services contract from The Dow Chemical Company. The services are for Dow’s propane dehydrogenation (PDH) expansion project in Freeport, Texas.

The value of the contract has not been disclosed but included in the second quarter of 2011 bookings. In Fluor’s office in Houston, Texas basic engineering for the projects will be implemented, which will be aided from Fluor’s office in Manila, Philippines. After the completion of the project, the facility will produce polymer-grade propylene.

The focus on growth and expansion in the chemical industry in the United States has improved recently. With the current partnership, Fluor has become a part of an important expansion project.

The company is witnessing signs of recovery in oil and gas markets and Global Services business. Recently, Fluor received a number of new awards driven by substantial mining, which have a lower margin profile. The company’s Mining business is expected to make continued progress ahead. Fluor has bids outstanding in Government, which could add to their backlog in 2011. Further, Global Services business is seeing signs of recovery. Fluor Corporation is confident of strengthening its market position and growth potential going forward.

Acting through its subsidiaries, Fluor Corporation is one of the largest professional services firms, providing engineering, procurement, construction and maintenance as well as project management services on a global basis. Recently, Fluor received a number of new awards driven by substantial mining, which have a lower margin profile. With its first-quarter 2011 earnings release, the company maintained its 2011 earnings per share guidance of $3.00 to $3.40 as it continues to expect a substantial order booking during the year.

It serves a diverse set of industries worldwide including oil and gas, chemical and petrochemicals, transportation, mining and metals, power, life sciences and manufacturing. It is also a primary service provider to the U.S. federal government.  The company’s prime competitor is Jacob’s Engineering Group (JEC).

We continue to maintain a Neutral rating on Fluor Corporation, with a Zacks #3 Rank (Hold recommendation) over the next one-to-three months.

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