The global economic downturn, coupled with the flagging demand for oil, gas, petrochemicals and refined products, has affected the stock performance of Foster Wheeler (NASDAQ:FWLT), a global engineering and construction contractor and power equipment supplier. The shares of the company have traded in a 52-week range of $12.73 to $79.97. This is in spite of the company’s strong financial performance for the recent quarter and the entire fiscal year 2008.
Foster Wheeler, based in Zug, Switzerland, and its operational headquarters in New Jersey, USA operates Global Engineering and Construction Group and the Global Power Group. The Global E&C Group designs and constructs processing facilities for the upstream oil and gas, LNG and gas-to-liquids, refining, chemicals and petrochemicals, power, environmental, pharmaceuticals, biotechnology and healthcare industries. The Global Power Group designs, manufactures and erects steam generating and auxiliary equipment for power stations and industrial facilities.
The company, with the wide range of business operations, recorded strong financial performance in the recent financial year (FY2008). For the full year 2008, net income was a record $526.6 million, or $3.68 per diluted share, compared with $393.9 million, or $2.72 per diluted share, in 2007. For the full year 2008, consolidated EBITDA (earnings before interest expense, income taxes, depreciation and amortization) was a record $686.1 million, compared with $591.9 million for 2007. The company’s net income in 2008 reached an all-time high, primarily because of the higher level of EBITDA generated by both the operating groups of the company. The company’s reported net income for the fourth quarter of 2008 stood at $99.9 million, or $0.75 per diluted share, compared with $78.1 million, or $0.54 per diluted share, in the fourth quarter of 2007.
The consolidated operating revenues of the company also increased at 34% to $6,854.3 million in fiscal year 2008, as compared to $5,107.2 million in fiscal year 2007. The increase in operating revenues in fiscal year 2008 reflects increased flow-through revenues of $1,376.4 million and greater business activity in both, Global E&C Group and Global Power Group. The flow-through revenues and costs result when the company purchases materials, equipment or third-party services on behalf of its customer on a reimbursable basis.
On the other hand, the company recorded significant decline in its order backlog for the financial year 2008. The backlog reflects the dollar value of backlog of unfilled orders includes amounts based on signed contracts as well as agreed letters of intent; and exclude third-party costs incurred by the company on a reimbursable basis as agent, which are referred as flow-through costs.
