Foster Wheeler Swings to Loss in 2Q10
Foster Wheeler reported net income for the second quarter of 2010 of $58.9 million, or $0.46 per diluted share, compared with $122.2 million, or $0.96 per diluted share, in the second quarter of 2009. Net income in both quarterly periods was impacted by asbestos-related provisions as detailed in the attached table. Excluding such items from both quarterly periods, net income in the second quarter of 2010 was $61.2 million, or $0.48 per diluted share, compared with $124.0 million, or $0.98 per diluted share, in the year-ago quarter.
Second-quarter 2010 consolidated EBITDA (earnings before interest expense, income taxes, depreciation and amortization) was $90.2 million, compared with $162.0 million in the second quarter of 2009. Consolidated EBITDA in both quarterly periods was also impacted by asbestos-related provisions as detailed in the attached table. Excluding such items from both quarterly periods, consolidated EBITDA in the second quarter of 2010 was $92.6 million, compared with $163.7 million the second quarter of 2009.
For the first six months of 2010, net income was $130.9 million, or $1.02 per diluted share, compared with $195.1 million, or $1.54 per diluted share, for the first six months of 2009. Consolidated EBITDA for the first six months of 2010 was $201.5 million, compared with $267.5 million for the first six months of 2009.
Foster Wheeler's Chief Executive Officer, Robert C. Flexon, said, "The company's net income in the second quarter of 2010 was below the average quarter of 2009 primarily due to market-related declines in scope revenues and EBITDA margins in both of our operating groups. Nevertheless, both operating groups continued to demonstrate outstanding performance in executing contracts - and maintained commercial excellence despite ongoing competitive pressure."
In commenting on the market outlook for the company's two business units, Flexon said, "Our outlook for the Global Power Group is unchanged. We expect EBITDA margin on scope revenue of 16-18% for full-year 2010, and we expect to exit 2010 with a level of scope backlog that will be well above the levels we reported in the first two quarters of this year."
Flexon added, "In our Global E&C Group, we now expect a steady, rather than accelerating, pace of new orders in the second half of 2010, with projects moving forward in a measured fashion and, in some cases, through phased releases. Although we see clients delaying decisions on certain significant project investments into 2011 due to a variety of factors, such as permitting, complexity of consortium/partner approvals, timing of political events such as elections, appointments to key positions in national oil companies and the pacing of investment decisions among multiple client projects, markets are continuing to show signs of improvement, particularly in emerging economies. However, as a result of these delays, and lower currency exchange rates as compared to 2009, our 2010 scope revenues in E&C are likely to be moderately lower than they were in 2009, whereas our previous outlook was for E&C scope revenues in 2010 to be comparable to 2009. As a result of excellent operating performance, we reaffirm our expectation that EBITDA margin on scope revenue in the Global E&C Group will be 18-20% for the full year 2010, bolstered in part by profit enhancement opportunities."
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