Bloomberg News

Fluor Fuels S&P 500 Declines After NuScale Stake Curbs Forecast

November 04, 2011

Nov. 4 (Bloomberg) -- Fluor Corp. made the third-biggest decline among Standard & Poor’s 500 Index companies after buying a majority stake in a reactor-technology firm curbed its earnings forecast for next year.

Fluor’s projected profit of $3.40 to $3.80 a share includes as much as 25 cents a share in costs to fund and operate the $30 million investment in NuScale Power, Chief Financial Officer D. Michael Steuert said on an earnings call yesterday. The forecast trailed the average estimate of $4 a share from analysts in a Bloomberg survey.

Fluor bought the stake in NuScale, which designs small modular reactors and is working on a natural cooling technology, in October. The Dallas-based company said its share of NuScale costs will be included in results for the power unit, starting this quarter. Power made up 8 percent of Fluor’s $20.8 billion in sales in 2010 and 28 percent of operating income.

“There’s going to be an earnings impact for the next couple of years from the investment in NuScale, but it’s a great long-term opportunity,” Chase Jacobson, an analyst at William Blair & Co., said in a telephone interview. Small modular reactors may be “the next viable nuclear power technology,” he said.

Fluor fell 6 percent to $55.09 at 1:03 p.m. in New York, following a drop of 7.7 percent that was the largest on an intraday basis since Sept. 22.

Net income in the third quarter was $135.4 million, or 78 cents a share, compared with a loss of $53.6 million, or 30 cents, a year earlier, Fluor said yesterday.

--With assistance from Thomas Black in Dallas and Will Daley in New York. Editors: James Langford, Cécile Daurat

To contact the reporter on this story: Heather Perlberg at hperlberg@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net


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