Foster Wheeler Sees Record Orders, Backlog in E&C Business in 2012, Expects Slow Recovery to Continue

---

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, ended 2012 on a mixed note as heavy costs related to asbestos-related provisions, depreciation and amortization offset record-level orders and backlog in the Global Engineering & Construction (E&C) Group. Net income was reported to be $6.3 million for the quarter, compared with $39.25 million in fourth-quarter 2011, and $136.02 million for the year, a 16.23% decrease from 2011.

Foster Wheeler executives stressed that results were more representative of the company's operational performance when measuring earnings before interest expense, income taxes, depreciation and amortization (EBITDA), as well as excluding the asbestos-related provisions. Using this calculation for both 2012 and 2011, earnings stood at $77.69 million for the quarter, a 3.59% increase from the same period in 2011, and $309.12 million for the year, a 5.46% increase from 2011.

Total revenues were reported to be $735.28 million for the quarter, a 34.86% decrease from fourth-quarter 2011, and $3.41 billion for the year, a 23.79% decrease from 2011. The Global E&C Group saw a record number of "scope" new orders in the fourth quarter, which contributed to a record scope backlog of $2.2 billion. The Global Power Group was negatively affected in the fourth quarter by a drop in executed boiler work projects. 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.

Industrial Info is tracking more than $80.5 billion in active projects involving Foster Wheeler, including the $700 million construction of a 240-megawatt (MW), coal-fired power station in Rio Turbio, Argentina, and the $800 million construction of oil and natural gas production platforms in Al Khobar, Saudi Arabia. The Argentina project involves the construct of a power station utilizing two pulverized, coal-fired circulating fluidized bed boilers (Foster Wheeler) to produce steam to drive two 120-MW steam turbines to supply power to the grid; Foster Wheeler is performing design-build work. The Saudi Arabia project involves the installation of drilling and processing platforms with an expected production capacity of 900,000 barrels per day of Arabian heavy crude, 3.4 million standard cubic feet per day of associated gas and 50,000 barrels per day of condensates.

"Strategically, we completed the reorganization of the E&C group to better support our growth strategy, and we completed two noteworthy acquisitions--one in November, and the other at the end of December," said Kent Masters, the chief executive officer of Foster Wheeler, in a conference call. "The Three Streams acquisition helps us strengthen our position in the Canadian oil sands market, while the Yonkers acquisition supplements our existing pharmaceutical business by providing us with construction management capabilities in this market."

Both of the company's major segments reported EBITDA declines for the quarter, although the Global Power Group saw in increase for the year:

• The Global E&C Group reported operating revenues of $504.24 million, a 40.34% decrease from fourth-quarter 2011, and EBITDA of $53.4 million, a 3.64% decrease. For the full year, the segment reported operating revenues of $2.42 billion, a 27.73% decrease from 2011, and EBITDA of $192.21 million, an 8.71% decrease.
• The Global Power Group reported operating revenues of $231.04 million, an 18.52% decrease from the same period in 2011, and EBITDA of $46.55 million, a 15.3% decrease. For the full year, the segment reported operating revenues of $995.31 million, a 4.08% decrease from 2011, and EBITDA of $207.86 million, a 12.68% increase.

Foster Wheeler executives expect the global economic recovery to continue at a slow pace for the rest of 2013, and expect the lower level of new orders in 2012 to result in an EBITDA decline in the Global Power Group. The Global E&C Group, however, is expected to see an EBITDA increase.

"When we take a longer-term view of the company's prospects, we believe Foster Wheeler is positioned for significant earnings growth in the years ahead, aided by the strategic actions we have taken and are taking to strengthen and expand each of our business groups--for example, the 2012 reorganization of our E&C Group, our continued focus on business line diversification, and the penetration of our products and services into new geographies," Masters said in the conference call.

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.