Fluor Corporation (FLR) received a contract from the U.S. Army to work for its Logistics Capabilities Program IV (LOGCAP IV) in Africa. US Africa Command focuses on protecting American interests and strengthening the defense in this region. The Task Order would aid the Army’s missions in Africa. The contract win would be reflected in the company’s backlog booked in the first quarter of 2012.
As per the deal, Fluor will provide logistic support throughout Africa and will construct camps in remote places. Over the next 21 months, consequent camp operations and logistical support services will also be provided by Fluor. Supply of food, fuel, water, laundry, showers, vehicles, and power generation and maintenance would be taken care by Fluor.
The camps are crucial for they offer the US troops a base of operation to continue with their work of advising and assisting African military forces in the continent. Fluor has been working for the US Army’s LOGCAP IV program from 2007.
Fluor’s international market remains robust, with 84% of the awards derived from outside the US with focus on Australia, the Middle East, Latin America and Canada. However, the prevailing macro uncertainty would be a matter of concern at least for the first half of the year. For the full year 2012, the company’s guidance remains in tact given the opportunities to avail of in Fluor’s diversified markets.
Acting through its subsidiaries, Fluor Corporation is one of the largest professional services firms, providing engineering, procurement, construction and maintenance as well as project management services on a global basis. It serves a diverse set of industries worldwide, including oil and gas, chemical and petrochemicals, transportation, mining and metals, power, life sciences and manufacturing. It is also a primary service provider to the U.S. federal government. The company’s prime competitor is Jacob’s Engineering Group (JEC).
We continue to maintain a Neutral rating on Fluor Corporation, supported by a Zacks #3 Rank (Hold recommendation) over the next one-to-three months.
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