Fluor Divests to Boost Finances and Refocus
Following an “extensive and comprehensive” strategic review, US engineering and construction company Fluor has decided to sell certain businesses in order to improve its financial stability and allow the remaining assets to refocus on select services in core markets.
“The strategic direction we are pursuing as a result of this process builds upon Fluor’s premier competitive position in our core markets in which we expect to deliver sustainable growth, strong cash flow and attractive returns to investors,” said CEO Carlos Hernandez.
Fluor, which is a major service provider to the energy and chemicals markets, will sell its construction equipment rental company (AMECO) and its government business, along with monetizing surplus real estate and non-core investments. The contractor anticipates these actions will generate in excess of $1 billion in aggregate proceeds.
With regard to its energy & chemicals business, Fluor said it will pursue lumpsum work only when there is a limited bid slate and there is a quantifiable advantage over other bidders or where it is a sole-source negotiated agreement. In addition, the group will only bid on lumpsum projects where it executed the front-end engineering and design package or has the opportunity to perform sufficient diligence.
In all cases, Fluor added that risk projects will be subject to an initial bid/no-bid approval followed by final approval by its executive team. This increased focus on selectivity will change the prospect pipeline profile and drive the company to a backlog and execution platform that can deliver consistent results, it said.
Fluor’s announcement comes after other rival engineering and construction groups have taken action to improve their performance. US contractor McDermott said late last month that it was exploring a sale of its Lummus Technology arm after receiving unsolicited approaches for all or part of the business.
In August this year, TechnipFMC, formed in January 2017 from the merger of French group Technip with US-based FMC Technologies, approved plans to split into two independent, publicly traded companies. The split is anticipated to be finalized in the first half of 2020.