Pangs of recession touch even a large worldwide contractor
When the science fiction movie ''Star Trek'' was still in production, location scouts excitedly called officials of the Fluor Corporation here. The moviemakers said the company's futuristic-looking headquarters building would make a perfect background for a cinematic sequence set on another planet.
Fluor, not at all impressed at the prospect of being in a film, waved away the Hollywood types. It's the same with members of the press in general. What goes on behind those black-mirrored towers just off the San Diego Freeway generally stays there. Particularly these days.
The giant engineering and construction company has been going through some major structural reorganizations and top-level management shake-ups. At much lower levels, there have been layoffs, reflecting a slowdown in business. Apparently, the combination of events has made Fluor more reticent than ever.
That doesn't mean the company is in any particular trouble. For the six months ended April 30, 1982, Fluor Corporation had record revenues of $3.7 billion, up 37 percent from the $2.7 billion reported the year before. First-half profits were $82 million, up almost 10.5 percent over the $74.3 million reported the year before.
For the fiscal year ended Oct. 31, 1981, Fluor reported record revenues and earnings. Revenues hit $6.1 billion, compared with $4.8 billion the year before, while net earnings hit $159.2 million, up from $131.8 million.
It was in that year that Fluor took a major plunge that was roundly hailed by the companies involved, but got baleful looks from Wall Street. At a cost of $2. 2 billion, Fluor acquired the St. Joe Minerals Corporation. With the acquisition , Fluor sought to diversify and, for the first time, actually have a position in minerals in the ground, in this case, lead, zinc, iron ore, gold, silver, coal, and oil and gas.
Picking up St. Joe cost Fluor $1.2 billion in cash and gave it a long-term debt of another $1 billion, compared with only around $80 million previously. World prices for commodities produced by the new subsidiary also slipped badly.
Fluor planned to generate substantial returns by selling off the Coquina Oil Corporation subsidiary acquired with St. Joe. Another reason was that Coquina was an independent operator in the oil and gas business. Since many of Fluor's best customers were petroleum companies, a ''potential conflict'' existed, the company said, and deemed it best to get rid of the unit.
Finding a buyer, however, turned out to be difficult. In May, Fluor entered into an agreement to sell Coquina to the Kerr-McGee Corporation for about $265 million. A month later the deal fell through, presumably because the buyer couldn't arrange for the financing within a ''reasonable time.'' Late in August, though, Fluor sold part of Coquina's oil and gas properties to the Petro-Lewis Corporation of Denver for $174 million.
Although Fluor's operations are generally profitable, both the sluggish domestic economy and generally poor conditions around the world, particularly in energy and natural resources where Fluor is most active, cast dark shadows over the future. The backlog of work in progress at the end of this fiscal year's six months stood at $13.9 billion, down from $18.8 billion the year before. More significant, new orders in-house were down to $1.5 billion, from $5.3 billion the year before.
All this generally negative news has had its effect on Fluor's stock. From a high of $71 a share early last year, the stock has been selling as low as $11.87 in recent weeks.
Still, an economic turnaround could just as quickly see a return to Fluor's high-flying days. The company insists that all the current reorganization will put it in a better position to move ahead when the economy picks up. Says J. Robert Fluor, chairman and chief executive officer, ''We are confident that the company will emerge from the current economic downturn stronger than ever before.''