Fluor Corporation (NYSE:FLR) is about to release earnings results. Ponder this Bear Case Scenario:
Projects by nature are in remote areas in inhospitable circumstances. The risk of cost over runs is always high and very near. Many of these regions also bring geo-political risks.
Fixed Price contracts will become the norm. Higher margins are normally included in these contracts but the risk is with Fluor.
Many of these contracts are labour intensive. Fluor has a payroll of some 40,000 people. Not everyone is suitable for the work. Top dollar is usually needed to attract the right staff.
Not an easy business.
George Gutowski writes from a caveat emptor perspective.