Foster Wheeler Reaps Benefits of Engineering and Construction Awards in Third-Quarter 2012, Sees More Ahead

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Foster Wheeler AG (NASDAQ:FWLT) (Zug, Switzerland), a global engineering and construction company and power equipment supplier, reported stronger profits in third-quarter 2012 as a record level of "scope" new orders in one of the company's two major segments boosted the scope backlog by 31% from the second quarter to more than $1.7 billion. Net income for the quarter was reported to be $58.22 million, a 57.96% increase from third-quarter 2011.

Foster Wheeler defines "scope" as "backlog, new orders booked and operating revenues on profit can be earned," as opposed to revenues involving "third-party costs incurred by the company as agent or principal on a reimbursable basis," according to the company's news release for its quarterly results.

Total operating revenues stood at $803.23 million, a 29.03% decrease from the same period last year. Delays in the awarding of contracts in the first half of the year negatively affected revenues in Foster Wheeler's two major segments, Global Power Group and Global Engineering & Construction Group. Although new scope orders in Global Power Group were down from a year ago, Global Engineering & Construction Group saw a record number of new scope orders, including large contracts for projects in Brazil and Venezuela. Asbestos-related provisions cut net income by $2 billion in the third quarters of 2012 and 2011 each.

Industrial Info is tracking more than $74 billion in active projects involving Foster Wheeler, including the $800 million addition of a delayed coker unit at a refinery owned by BP Products North America Incorporated (NYSE:BP) (London, England) in Whiting, Indiana. The expansion, which is part of the larger $3.8 Billion Sour Canadian Crude Project, involves the construction of a six-drum, 100,000-barrel-per-day unit manufactured by Foster Wheeler to support the processing of Canadian Sour Crude.

Industrial Info also is tracking the $500 million construction of a Deepwater Offshore Pipeline, as part of the Walker Ridge Pipeline Project, for Enbridge Energy Partners LP (NYSE:EEP) (Houston, Texas). The pipeline, which will begin in Golden Meadow, Louisiana, will run 165 miles, at depths of 7,000 feet, to transport natural gas from the Eugene Island Oilfield Production Platform off the Louisiana coast to the Big Foot Deepwater Development Oilfield Platform, which is operated by Chevron Corportation (NYSE:CVX) (San Ramon, California).

"We're feeling very positive about the forward momentum of our Engineering & Construction and Power businesses," said Kent Masters, the chief executive officer of Foster Wheeler, in a conference call.

Although the Global Engineering & Construction Group saw declines in revenues and income before interest expense, income taxes, depreciation and amortization (EBITDA), the Global Power Group nearly doubled its EBITDA:

• The Global Engineering & Construction Group reported operating revenues of $578.07 million, a 34.46% decrease from third-quarter 2011, and EBITDA of $51.96 million, an 11.35% decrease.
• The Global Power Group reported operating revenues of $225.16 million, a 9.86% decrease from the same period last year, and EBITDA of $65.15 million, compared with $35.31 million in third-quarter 2011.

Foster Wheeler executives expect scope revenues for Global Engineering & Construction Group and Global Power Group to be roughly the same as they were in full-year 2011, at $1.6 billion and $1.03 billion, respectively. Among the new contracts awarded in the third quarter were for the construction of a selective catalytic construction project in the U.S.; the design and supply of a heat recovery steam generator for a combined-cycle power plant in Poland; and the design and supply of a 60-megawatt circulating fluidized bed for Yeosu Cogeneration Corporation in South Korea.

"Power generation markets globally remain relatively weak," said Gary Nedelka, the chief executive officer of the Global Power Group, in the conference call. "We are now seeing the effects of the global slowdown of economic activity in Asia; even so, that region continues to offer the largest number of near- to intermediate-term prospects of solid fuel generation. The other great spot for potential demand is the Middle East, which is showing real promise as a potential market for solid fuel-powered generation, specifically in the opportunity to burn petroleum coke, and in some cases, coal."

For more information, visit Industrial Info's International Power Project Database.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.