American engineer Fluor has called off plans to sell its government contracting business, which it announced last September as part of a plan to raise $1bn.
It has also delayed the release of its full-year financial report following a Securities and Exchange Commission investigation into past reports.
The move to sell the government arm was part of a restructuring plan devised after the Texas-based company withdrew its profit forecast for 2019 and revealed a surprise second quarter net loss of $555m on revenue down 16% to $4.1bn.
Yesterday, the company issued a statement saying that it had since realised some of the early benefits of its restructuring plan, and "no longer deemed it advisable or necessary to proceed with the sale of this business".
Carlos Hernandez, Fluor’s chief executive, said: "We are excited about retaining this important and attractive asset that provides us exposure to long-term clients, with less-cyclical projects, cost-reimbursable contracts and high cash-flow potential all drive our company-wide focus on having an appropriate mix of risk in our backlog."
The sale of its Ameco equipment business, announced at the same time, is still due to go ahead. The company said it had made "significant progress" with one or more potential buyers.
The company also announced that the SEC was conducting an investigation into its accounting and financial reporting, and had requested documents related to projects for which the company recorded charges in the second quarter of 2019.Â
Fluor said it was responding to the SEC’s data requests and was conducting its own internal review, adding that "material errors" were possible.Â
It’s statement said: "The Company has not made a determination at this time as to whether there are prior period material errors in its financial statements, although such remains possible."Â After the announcement, Fluor’s share price fell, closing trading on 19 February at a 17-year low.
Fluor has delayed the release of its full-year financial statement, but did give an indication of what it expected that it would be in line with market expectations.
It said it expected its revenue to be $12.6bn, consisting of $3.7bn from the energy and chemicals sector, $1.9bn from mining and industrial, $2.6bn from infrastructure and power, $2.2bn from government work, and $2.2bn from "diversified services".
- Edited 20 February 2020
Image: Fluor’s headquarters in Irving, Texas (Fluor)