Earlier today the Swiss firm, Foster Wheeler AG, reported a significant annual decline in fiscal results. The company attributed this to various economic factors, as Gasworld explains.
An ‘impacted’ fourth quarter
Foster Wheeler obtained $32.8m net income for quarter four of 2010, or $0.26 per diluted share, compared with $65.1m, or $0.51 per diluted share in the fourth quarter of 2009. Similarly, EBITDA underwent an equally significant decline from $108.1m during Q4 of 2009, to $71.0m during the final quarter of 2010.
According to an official report released by Foster Wheeler, consolidated EBITDA in both quarterly periods was impacted by lower realised margins, volumes of work executed and a $13.2m impairment charge on partially owned Italian power projects. Nevertheless excluding these items, consolidated EBITDA during Q4 of 2010 was still significantly less than in the same period in 2009, namely $76.5m versus $129.2m.
Foster Wheeler’s Interim Chief Executive Officer, Umberto della Sala, commented that financial results for the fourth quarter of 2010 were below average, but he qualified, “Both of the company's business groups continued to deliver excellent operating and commercial performance. However, the company's adjusted net income was below the average quarter of 2009 due in part to lower volumes and margins in the Global Engineering and Construction Group and a higher effective tax rate.$quot;
A full year analysis
Full year results for 2010 net income depicted a similar year-on-year trend. Fiscal 2010 saw net income of $215.4m or $1.70 per diluted share, compared with $350.2m, or $2.75 per diluted share in 2009. Consolidated EBITDA revealed a similar picture, with 2010 seeing EBITDA of $359.7m, while 2009 comparatively achieved EBITDA of $503.8m.
Nevertheless, the CEO drew attention to an increased value of new orders during the latter part of the year, $quot;We ended 2010 on a very strong note, with robust levels of scope backlog and fourth-quarter scope new orders in both business groups.$quot;
Della Sala continued, “Specifically, our Global Power Group reported fourth-quarter scope backlog and scope new orders that were nearly double the levels of the same period of 2009.”
Arguably with these positive indicators in mind, despite this shock fiscal report, the outlook for Foster Wheeler is one of improvement. Indeed Della Sala went so far as to describe the backlog figure of Foster Wheeler’s E&C Group as, particulary promising: “The backlog figure for our E&C Group is especially impressive, considering the challenging market conditions experienced in 2010 and the fact that the company removed from backlog $123 million of scope value and a material number of man-hours in the fourth quarter of 2010 in connection with a contract where Foster Wheeler and the client agreed to change the execution strategy for the project,$quot; explained Della Sala.