Foster Wheeler AG has reported net income for the third quarter 2010 of $51.7m, or $0.41 per diluted share. This compares with $90m, or $0.71 per diluted share, in the same quarter of 2009.
Accordingly adjusted net income for both quarterly periods was $50.1m, or $0.40 per diluted share in 2010 and $91.7m, which corresponds to $0.72 per diluted share in 2009.
Third quarter 2010 consolidated earnings before interest expense, income taxes, depreciation and amortization (EBITDA) was $87.2m, which contrasts against $128.2m from the respective period of 2009. Similarly, consolidated EBITDA in the third quarter of 2010 was $85.5m, compared with $129.9m in Q3 of 2009.
The Company’s CEO, Umberto della Sala, commented, “Both of our business units are operating extremely well, but the company’s net income in the third quarter of 2010 was below the average quarter of 2009 due primarily to weaker market conditions, specifically lower volumes of work executed in each of the two operating groups – and a lower realised EBITDA margin in our Global Engineering and Construction (E&C) Group.”
In particular, Foster Wheeler attributed lower volumes of work to obstacles such as the business interruption associated with the firm’s equity interest in a power plant in Chile that was disabled by an earthquake in February 2010.
Likewise, operating revenues were down year-on-year, at $153m in the third quarter for 2010 and $204m for the third quarter of 2009. Foster Wheeler associated the fall with ‘the lagging impact of a reduced level of boiler orders in 2009. Della Sala commented on full year prospects. He said, “In our E&C Group, we expect full-year 2010 EBITDA margin on scope revenue to be in the range of 18-20%. In our Global Power Group, we expect the full-year EBITDA margin on scope revenue to be in the range of 19-21%.”
Meanwhile, with regard to 2011 prospects, della Sala added, “Due to the lagging impact of the competitive conditions under which contracts have been awarded in 2010, it is likely that EBITDA margins in both of our operating groups will be lower in 2011 than in 2010. However, if proposal activities and client inquiry levels continue to remain high, we could very well see an increase in scope revenues in 2011 as compared to 2010.”
Share repurchase progress
During Q3 of 2010, the company resumed its share repurchase program by purchasing 4.3million shares for around $99.2m. By the end of this quarter, the company had approximately $165m remaining under the existing authorisation.