Fluor has reported a restating of previous results and a decision not to participate in competitively bid lump-sum projects.
The company launched a review in September 2019 in a bid to improve cash generation and cut risk. This led it to sell off some parts of its business and suspend its dividend. It launched a broader review this year.
Fluor’s energy and chemicals business will now only carry out reimbursable or open-book lump-sum conversion engineering, procurement and construction (EPC) work.
Competitive bidding for projects creates a “transactional market where the allocation of risk is not appropriately distributed”, Fluor said.
The company also reported a net loss from continuing operations in 2019 of $1.7 billion. This included impairments of around $533 million. Revenue reached $14.3bn, down from $15.2bn. The contractor has suspended all guidance for the year as a result of COVID-19 and the impact on commodity prices.
Fluor also reported results from a review of a US government project, carried out by a special committee. As a result, it has restated annual results for 2016, 2017 and 2018, in addition to quarterly results for 2018 and 2019.
More broadly, the company said its “disclosure controls and procedures” had been ineffective. It has adopted a number of steps in order to tackle this, including increased standardisation for projects and better training.
“Today’s filing marks the culmination of a thorough review of the financial reporting on a significant number of our lump-sum projects. We agree with the findings of the special committee and are moving forward with our remediation plan,” said Fluor’s CEO Carlos Hernandez.
“Fluor continues to have substantial liquidity and dedicated employees who are ready to tackle current and future challenges.”
The company should file results for the first quarter of 2020 within the next month. Second quarter figures will come four weeks later, with third quarter results coming four weeks later.
Fluor’s energy and chemicals business reported a loss of $95mn for 2019, down from a $335mn profit in 2018. New awards fell to $3.7bn, from $10.6bn in 2018.
The company had set out plans to sell its government business in the third quarter of 2019. In February 2020 it announced a change of heart and opted to keep this.