Fluor 2005 Annual Report Download - page 13

FLUOR CORPORATION 2005 ANNUAL REPORT
NEW AWARDS
& BACKLOG
(dollars in billions)
■ new awards ■ backlog
5.0
4.0
3.0
2.0
1.0
0.0 2003 2004 2005
REVENUE BY SEGMENT
Industrial & Infrastructure
24%
(left) The Fluor-led Infraspeed
consortium was assembled to
design, build and maintain the
HSL-Zuid high speed rail connec-
tion between Amsterdam and the
Belgian border. With a top speed of
185 miles per hour, the train will
revolutionize public transport and
be a key element in the European
Rail Network.
(far right) A Fluor-led consortium,
Zumbro River Constructors, is
responsible for the design and
reconstruction of a highway in
Rochester, Minnesota. The ROC 52
highway utilizes a Single Point
Urban Interchange designed to
move traffic through the intersection
in one movement, thereby accom-
modating heavier traffic loads than
a traditional intersection.
(near right) Fluor Chile S.A. is
providing EPCM and commissioning
assistance services for new
heap leach, solvent, extraction,
electrowinning and infrastructure
facilities at the Escondida minesite
located in the Atacama desert of
northern Chile. The production
capacity of the new facility is
180,000 tons per annum of copper
cathode. This is the latest large-
scale project performed by Fluor
at Escondida since executing the
original facilities in the late 1980’s.
Fluor’s Industrial & Infrastructure (I&I) business segment
serves a broad range of diversified markets, including life
sciences, mining, general manufacturing, transportation,
commercial & institutional, telecommunications and
microelectronics. Continuing global economic expansion
is driving strong demand for raw materials, consumer
products and infrastructure programs.
I&I overall had some significant challenges during the year, with loss provisions on several projects
more than offsetting profits from the rest of the unit’s operations. As a result, the segment
reported an operating loss of $17 million in 2005, down substantially from an operating profit
of $62 million last year. Fluor has taken steps to improve unit performance going forward,
including strengthening the management team. New awards for the year were $2.3 billion, driven
primarily by strength in mining and infrastructure. Backlog declined 24 percent, to $3.9 billion,
as work performed outpaced new awards during the year.
Life sciences continues to be an important market and an area of significant opportunity
for Fluor, but the market softened during 2005, and expectations for near-term growth are
tempered. There are some early signs of a recovery in the biologics area, including vaccines and
large-scale cell culture manufacturing projects, in particular. Fluor’s regulatory compliance,
commissioning, and validation services business, which provides a key step in bringing new facilities
into production as well as keeping existing facilities operating and FDA-compliant, continues to be
important. Fluor’s ability to provide full-scope design/build/validation services, along with cost and
schedule certainty, is a key market differentiator that is unmatched in the industry.
During 2005, the I&I segment performed a substantial amount of mining work, resulting from
very strong new awards in 2004. The global mining market has substantially improved after many
years of under-investment. Driven by strong global demand and commodity prices, Fluor is working
on three significant copper projects in South America. Toward the end of 2005, a Fluor 50/50 joint
venture was awarded a contract to provide EPCM services on a major iron ore project in Australia
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