International engineering/construction giant Fluor Corp. is selling its construction equipment rental company (Ameco) and government business, along with surplus real estate and other non-core investments, the result of its corporate strategic review.
Fluor anticipates these sales to generate in excess of $1 billion in aggregate proceeds, Kallanish Energy reports.
In addition, the company plans to reduce its quarterly dividend by more than 50%, to $0.10 per share, beginning with the next quarterly dividend declaration.
The results of the operational review led to a new organizational structure. The company will shift to a model in which business groups have direct control over the functions that support operations.
These actions are expected to improve the speed of decision making and drive greater accountability within the businesses. As a result of these and other changes, the company anticipates overhead reductions of $100 million.
“Together with our Board of Directors and outside advisors, we took an extensive and comprehensive look at our broader business to determine the best strategic path to return the company to consistent profitable growth,” said Carlos Hernandez, Fluor CEO. “The strategic direction we are pursuing as a result of this process builds upon Fluor’s premier competitive position in our core markets in which we expect to deliver sustainable growth, strong cash flow and attractive returns to investors.”
Fluor continues to reinforce revised project pursuit criteria for all businesses:
* The Energy & Chemicals segment will pursue lump sum work only when there is a limited bid slate and there is a quantifiable advantage over other bidders, or where it is a sole-source negotiated agreement. Fluor will only bid on lump sum projects where it executed the front-end engineering and design package, or has the opportunity to perform sufficient diligence.
* The Mining, Metals and Industrial segment will continue to pursue predominantly reimbursable work applying the revised project pursuit criteria.
* The Infrastructure segment will focus efforts in North America and continue to extend its presence in states where there is an established track record and strong department of transportation relationships, including Texas, Arizona, California, Virginia and North Carolina.
* The Government segment will no longer pursue fixed-price projects.
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