Fluor re-evaluates risk, project selection amid $555M Q2 loss | Dump Trucks Charlotte NC
Columbus Ohio Dump Truck Company Brief:
- Fluor Corp. reported a net loss of $555 million in its second quarter, compared to $115 million in earnings recorded for the same period last year.
Dump Trucks Columbus OH Insight:
Fluor stressed to stakeholders during its Aug. 1 earnings call that it had been undergoing a major shift in strategy before and after it replaced its CEO around halfway through the quarter, which impacted its results.
"We have already enacted changes in our bid/no bid process so that our future backlog will be comprised of high-quality projects with a contract structure and execution approach that will generate improved risk-adjusted margins," Hernandez said. To that end, the columbus oh dump truck company will only bid on projects in several of its key segments that meet the following criteria.
- Energy/chemicals — The firm will only pursue fixed-price columbus oh dump truck company in which there is a limited bid slate and an identifiable, quantifiable advantage over other bidders, or columbus oh dump truck company that carries with it a sole-source, negotiated lump-sum agreement. It will only select projects on which Fluor executes the FEED (front-end engineering and design) package or is allowed to perform sufficient due diligence.
- Infrastructure — Fluor will narrow its efforts to North America and extend its presence in states in which it has established track record and strong DOT relationships, including Texas, Arizona, California, Virginia and North Carolina.
- Government — Fluor will no longer pursue lump-sum projects unless there is an "appropriate allocation of risk between client and contractor." Some lump-sum projects, such as the Rovuma LNG project in Mozambique, do meet Fluor's standards, even under its newly increased scrutiny, Hernandez noted.
"It's no secret that the industry has suffered severely over the last couple of years given what has happened in shifting of risk from clients to contractors," Hernandez said. "Although the trend in our industry is to pivot away from lump-sum work, we still believe that Fluor has the talent and expertise to win and execute these projects, albeit on a more selective basis."
Another contractor in the Top 25 of ENR's list, Granite Construction, also announced a major shift in strategy last week during its second-quarter earnings report. With a $97 million loss for the period, CEO James Roberts announced that the firm had re-evaluated its assessment of risks when taking on projects.
“Instead of entering into what we believed to be a partnering relationship," Roberts said, "it is now clear that, especially in the context of these megaprojects, the fixed-price design-build contract delivery model and the public-private partnership contract-delivery model resulted in an untenable imbalance in risk-sharing between Granite and the project owners."