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Fluor to cut 5,000 jobs
March 9, 1999: 1:51 p.m. ET

Engineering firm to consolidate, take $130M charge; issues earnings warning
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NEW YORK (CNNfn) - Fluor Corp., struggling with what its chief executive officer called "deteriorating business environments in our two principal business segments," said Tuesday it would consolidate its businesses into four groups and cut 5,000 jobs, or nearly 9 percent of its workforce, and take a one-time charge of $130 million in the fiscal second quarter.
     The international engineering, construction and maintenance-services firm said the staff reductions, to be completed by the end of 1999, will come out of the company's engineering, procurement and construction (EPC) business, Fluor Daniel, which will close 15 offices. The firm noted that 4,000 jobs directly involved with project activity and an additional 1,000 overhead positions will be eliminated.
     Fluor (FLR) said it expects to save $160 million annually from the reduction in overhead, and that it will take a one-time charge of $130 million in the second quarter to carry out the closures and job cuts, as well as restructure the company into four business groups: Fluor Daniel; A.T. Massey Coal Co.; Fluor Global Services; and Shared Services, an in-house administrative service organization.
     "While we are confident that these changes will advance the growth of shareholder value over the long term, the external business outlook today has severe challenges," Chairman and CEO Philip J. Carroll Jr. said at the annual shareholders' meeting Tuesday. "The repositioning of the company's business activities are expected to help mitigate the current business slowdown and capitalize on the eventual upturn in the capital investment cycle."
Earnings warning

     The Irvine, Calif.-based firm, which posted $13.5 billion in revenue in 1998, said for the fiscal year 1999, the corporation expects to post net earnings before charges of $2.65 a share, a full 34 cents below the consensus estimate of analysts polled by research firm First Call.
     First Call research director Chuck Hill said that as late as yesterday some of the analysts reconfirmed their estimates aware of Fluor's announcement today and indicated there may be some surprise on the Street regarding the company's downwardly revised expectations.
     Part of the reason for lower earnings, Fluor said, is an expectation that its A.T. Massey Coal Co.'s year-end operating earnings will fall 13 percent below 1998 levels.
     In early afternoon trade, shares in Fluor were down 1-5/16 at 34-3/4 on the New York Stock Exchange. Back to top


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